Americans Cutting Back Slightly Less as Summer Nears

In recent weeks, Americans have been less likely to report that they are cutting back on their weekly spending, potentially paving the way for a rise in consumer spending during the summer season. Still, the change is a relatively small one, and a large majority of Americans still say they plan to cut back; the majority has dropped from 70.4% to the current 67.8%. Since Gallup began the polling series in June 2009, "about two-thirds of Americans or more have said they are cutting back on spending, ranging from a high of 73% in July 2009 to a low of 65% in December 2010." Although the wealthiest Americans are less likely to say they are cutting back on spending, nearly half of those making over $240,000 say that is their intention.

According to Gallup, there has been a correlation between people saying they are cutting back and actual spending. Although the "statistical relationships are not extremely strong," it appears "that when there are changes in the percentage of Americans telling survey interviewers they are cutting back on their spending, actual spending -- at least as measured by Gallup's spending measure -- does, in fact, change in the following weeks." The low of 65% of Americans reporting plans to cut back last December, for example, coincided with increased consumer spending during the holiday season.

Writes Gallup: "History suggests that at least a modest rise in spending could ensue in the coming weeks." Last summer, however, self-reports on cutting back on spending dropped for only a short period of time, and the expected rise in spending this summer could be similarly short-winded.

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The New Rich?

Wealthy people were considered to be less hurt by the economic downturn than the poor and middle class were, yet a new study from marketing consulting firm Harrison Group suggests that consumer habits have changed in the aftermath of the economic downturn. In a study of Americans with an average annual income of $275,000, Harrison Group found that wealthy consumers were less willing to pay for the large markups on name-brand goods in the first quarter of 2011 than they were in 2010. While the survey found decreasing brand consciousness and increasing use of sales across the survey, the largest change came in response to a question on willingness to spend on stylish brands. In 2010, 51% agreed that they were willing to "spend more for designer brands because they [were] the most stylish and fashionable," compared to only 32% of consumers in the first quarter of 2011. The survey results represent only one financial quarter of each year, and seem strange since the economy actually improved between 2010 and 2011. If the trends continue, this would represent an important change in the behavior of high income consumers and, as a result, in the ways that high-end companies market to reach them.

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