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Eighty-six percent of U.S. consumers believe the country is in a recession, and more than half of these feel that the economic climate won’t change for at least a year, according to a new online survey by The Nielsen Co., conducted in the midst of economic turmoil last month.
Indeed, consumers have a grim outlook for the near future. Only 18 percent said they believe the recession will be over within a year, and the 25- to 29-year old demographic have the least amount of confidence in the economy, with just six percent saying the recession would be over within 12 months. Fifty-two percent of consumers in this age range say they do not feel the recession’s end would come that soon. Similarly, only seven percent of consumers age 65 and over believe the recession will be over within the year, with 63 percent 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, v.p., marketing, 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 more women (91 percent) than men (82 percent) feel the U.S. economy is in recession, and men were markedly more optimistic than women about the recession’s end, with 27 percent responding affirmatively, compared to only 11 percent of females. When asked about the state of their own personal finances over the next 12 months, 39 percent of females responded “not so good” compared to 28 percent of males. Only 16 percent of women surveyed think their job prospects over the next 12 months will be good, compared to 26 percent of men.
Not surprisingly, Nielsen’s research shows that 38 percent 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 percent of consumers age 50 to 54 and 52 percent of those age 55 to 59 -- cited the economy as their greatest concern. Among all U.S. consumers, increasing fuel prices comes in a distant second place at 10 percent, followed by debt (9 percent), increasing utility bills (7 percent), increasing food prices (5 percent), and job security (5 percent).
“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.”
Consumers are employing a number of belt-tightening strategies to help them cope with economic woes, according to the study. Trying to save on gas and electricity was cited by more than two-thirds (67 percent) of U.S. consumers, while more than half of consumers (56 percent) say they are cutting back on out-of-home entertainment, spending less on new clothes (55 percent), and using their cars less often (54 percent). Just four percent 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 percent of consumers put any spare cash into savings, while 36 percent use it to pay off debts, credit cards, or loans. Nearly a quarter of consumers (24 percent) report having no spare cash.
The Nielsen Global Online Consumer Survey, conducted by Nielsen Consumer Research, was conducted from September 22 to October 6, 2008 among 28,663 Internet users -- including more than 500 U.S. consumers -- in 52 markets from Europe, Asia Pacific, North America, and the Middle East.