Consumers Continue to Feel Sting of Recession

CUNA, Consumer Federation of America release annual survey of consumers’ holiday spending plans.

November 25, 2011

Consumers continue to feel the sting of the most severe economic crisis since the Great Depression, with more saying their financial condition is worse than last year and fewer reporting their finances have improved, according to results of the 12th annual nationwide holiday spending survey of consumers conducted by CUNA and the Consumer Federation of America (CFA).

In the national survey of 1,011 people, a significantly higher percentage (37%) reported their financial condition was worse this year than a year ago, compared to 30% last year.

Only 19% reported their condition was better compared to a year ago, versus 23% last year.

This helps explain why 41% said they were planning to spend less during the holidays this year than last year, compared to 8% who said they planned to spend more. These findings are roughly the same as last year’s results.

These results are an improvement from the 55% of respondents who, in the 2008 survey at the depth of the Great Recession, said they intended to spend less. But from 2000 to 2007, the percentage who indicated they planned to spend less never exceeded 35%, and often was 30% or lower.

“The good news is that spending plans are stronger than they were at the worst stage of the recession in 2008,” said CUNA Chief Economist Bill Hampel “The bad news is spending plans are still considerably below where they were before the recession.”

The survey revealed a direct link between financial condition and spending. Of those who said they planned to spend more, 33% indicated their financial condition was better than a year ago, while only 19% said it was worse.

Of those who said they planned to spend less, only 15% indicated their financial condition was better while 55% said it was worse.

The lingering effects of the recession, as well as the consumer and mortgage debt overhang, are also seen in the survey statistics regarding concerns about making monthly debt payments.

Over the past year, those worried about meeting monthly credit card payments rose from 24% to 27%, and those worried about meeting payments on all types of debts (including mortgage debt) rose from 43% to 45%.

High- vs. moderate-income

Not surprisingly, high-income households are much more likely to report improvement in their financial situation than low- and moderate- income households. Among households with at least $100,000 in annual income, 35% said their financial situation was better and only 18% said it was worse.

By comparison, among households with annual incomes below $25,000, 13% indicated improvement while 50% reported worsening in the past year.

For households with annual incomes of $25,000 to $50,000, 24% indicated improvement and 39% indicated worsening. Slightly more than half of U.S. households have incomes below $50,000.

It's no surprise, then, few high-income households reported concern about meeting monthly debt payments: 23% compared to 59% of households with less than $25,000 in annual income and 54% of households with $25,000 to $50,000 in income.

Click here for a summary of the survey results [pdf], including results from previous years.