You are here
Americans' financial security has been shaken, yet they are divided in their willingness to make spending cuts. While nearly half (49 percent) of all adults are not ready to compromise their standard of living, the other half see little choice, according to a new study by Multi-sponsor Surveys.
The results of the “2009 Economic Impact Market Segmentation Study” show that consumers are making the strongest efforts to limit spending on vacations (45 percent making strong effort), dining out (45 percent), entertainment (44 percent) and clothing (43 percent). Most find it hardest to cut back on food, heat/utilities, health care and transportation. Parents are particularly reluctant to reduce spending on their children, with only 19 percent of parents making a strong effort to limit those expenses.
This national survey of 1,008 adults conducted in late February identified five distinct consumer segments, each facing the recession from a different perspective.
Roughly one in three (34 percent) adults fall into the two groups hit hardest by the recession and forced to make painful cutbacks in spending -- the Down & Out and On-the-Edge segments. Most of these consumers have experienced job loss, pay cuts or loss of insurance coverage.
One in five (19 percent) are Hold-Outs -- a young group clinging to their standard of living despite being on shaky financial ground. They are most likely to agree they have "probably been living beyond (their) means for years."
Nearly half (47 percent) of adults are in the two most financially secure groups: Cautious Optimists and Secure Spenders. While Secure Spenders typically see no reason to compromise their standard of living, Cautious Optimists are more willing to curtail spending for what they believe will be a short-term recession.
No product category is immune to consumer cutbacks, although some are better positioned than others. For example, "necessities" such as prescription medicine, toothpaste and fresh fruits/vegetables have suffered far fewer cutbacks than discretionary purchases like anti-aging skin care products, organic produce and bottled water. Across all product categories, the most dramatic spending cuts have been made by the Down & Out and On-the-Edge segments.
Princeton, N.J.-based Multi-sponsor Surveys will continue to track the buying habits of these consumer segments at two-month intervals in order to gauge the recession's impact on consumer spending for health care, medicine, food/beverages, dietary supplements, personal care products and other categories.