Why most Americans are still hesitant to spend
A financial research company published good news on Tuesday about the average financial security of Americans. The company, called Bankrate, said in their report that Americans’ financial security has increased in October for the third consecutive month.
This jump in security comes from an improvement in comfort level with debt, net worth, job security and overall financial situations, according to the report.
Only Americans’ comfort with their savings has decreased over the past year.
Despite this cause for celebration, Americans are actually holding back. Bankrate also reported that two-thirds of Americans said they are limiting the amount they spend each month.
Of the majority who said they were limiting their spending, 32 percent cited stagnant income, 29 percent cited the need to save more and only 16 percent said their main reason was their concern about the economy.
“Sustainable growth in household income is the missing ingredient from this economic recovery and the leading culprit for why consumers are holding back on monthly spending,” said Greg McBride, CFA, Bankrate.com chief financial analyst.
In addition to socioeconomic standing, age also was correlated with answers to Bankrate’s survey.
Millennials, or those ages 18 to 29, were the most likely to say their primary reason for spending less is their need to save more.
Those ages 30 to 49 were the most likely to report they limit their monthly spending, and experts suspect this is because this age group is the most likely to be buying homes and cars as they raise children.
Seniors were the most likely to cite stagnant income or worry about the economy than any other age group, likely because many seniors depend on fixed incomes, while interest rates continue to sit at record lows.
This research shows a continuation of a trend measured during the summer.
American Consumer Credit Counseling, a financial advising nonprofit, reported in July that more than one-third of Americans had not budgeted any money for a summer vacations, and a majority of Americans were likely not going to take a vacation at all.
This research showing financial hesitance has caused many experts to look at the upcoming holiday shopping season with concern.
Not matter the time of year, most research suggests the recovering economy isn’t necessarily an instant fix for consumer’s low spending.
Bankrate collects their data via phone interviews with adult consumers, conducted by Princeton Survey Research Associates International.