U.S. Consumers Pessimistic
Most believe poor economy will last longer than 12 months, "tightening belts"
SCHAUMBURG, Ill. -- The majority (86%) of U.S. consumers believe the country is currently in a recession and more than half (54%) believe it will last longer than 12 months, according to a new online survey by The Nielsen Co., conducted in the midst of economic turmoil last month. Only 18% said they believe the recession will be over within a year. And more than two-thirds (67%) are trying to save on gasoline as a belt-tightening strategy to help them cope with economic woes.
The least amount of confidence was expressed by 25- to 29-year olds, with just 6% saying the recession [image-nocss] would be over within 12 months; 52% of consumers in this age range say they do not feel the recession's end would come that soon. Similarly, only 7% of consumers age 65 and over believe the recession will be over within the year, with 63% of consumers in this age range saying they don't believe the recession will be over within 12 months.
"Younger consumers grew up in an era of prosperity and have never really known economic challenges to this extent," said James Russo, vice president of marketing for Nielsen. "To them perhaps, the current economic downturn is uncharted territory. There is a pervasive feeling of uncertainty, and concern which is clearly affecting spending levels. Older consumers are understandably concerned because of the potential impact of the economic downturn on their near-term financial needs."
Nielsen's survey shows that interestingly, more women (91%) than men (82%) feel the U.S. economy is in recession. Men were markedly more optimistic than women about the recession's end, with 27% of males responding affirmatively, compared to only 11% of females. When asked about the state of their own personal finances over the next 12 months, 39% of females responded "not so good" compared to 28% of males. Only 16% of women surveyed think their job prospects over the next 12 months will be good, compared to 26% of men.
Not surprisingly, Nielsen's research shows that 38% of U.S. consumers consider the economy their biggest concern over the next six months. The finding was fairly consistent across different age groups, with older Americans even more worried-48% of consumers age 50-54 and 52% of those age 55-59-cited the economy as their greatest concern. Among all U.S. consumers, increasing fuel prices comes in a distant second place at 10%, followed by debt (9%), increasing utility bills (7%), increasing food prices (5%) and job security (5%).
"Younger consumers have more time to weather the storm, rebuild their savings, and position themselves for growth," said Russo. "It is worth noting, however, that older consumers, while understandably concerned, control nearly three-quarters of the net worth in the U.S., and have done a better job of managing their finances with higher savings rates and lower debt levels."
Nielsen's survey shows that consumers are employing a number of belt-tightening strategies to help them cope with economic woes. Trying to save on gasoline and electricity was cited by more than two-thirds (67%) of U.S. consumers, while more than half of consumers (56%) say they are cutting back on out-of-home entertainment, spending less on new clothes (55%) and using their cars less often (54%). Just 4% report taking no action at all.
Should they find themselves with extra money in their pockets, the majority of U.S. consumers are hesitant to spend it. Once they have covered essential living expenses, 38% of consumers put any spare cash into savings, while 36% use it to pay off debts, credit cards or loans. Nearly a quarter of consumers (24%) report having no spare cash.
"By the end of the second quarter, most U.S. consumers had already come to the conclusion the country was in recession," said Russo. "As far as consumers are concerned, it doesn't particularly matter that a growing number of economic indicators are pointing in that direction. They were feeling pain in their wallets and bank accounts long before October's tumultuous stock market activity."
The Nielsen Global Online Consumer Survey by Nielsen Consumer Research was conducted from Sept. 22 to Oct. 6, 2008.
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