May 5, 2009
Most in US think economy still in trouble
May 5, 2009
By Brad Dorfman
CHICAGO (Reuters) - The majority of U.S. consumers do not think the worst of the U.S. economic crisis is behind them and plans to spend on luxury items remain low, a new survey showed on Tuesday 5 May.
Britt Beemer of America's Research Group (Photo: www.americasresearchgroup.com)
Only 34.3 percent of consumers surveyed by America's Research Group said they think the worst of the crisis has passed, while 52 percent said they did not think the worst was over yet.
"The consumer still feels that they are in the bottom of this pit and they are by no means getting out of it," said Britt Beemer, founder of America's Research Group, which polls consumers on spending behavior.
In a series of questions asked for Reuters, Beemer's group also found that consumers are still much more focused on price when buying food than a year ago and that almost one third used their tax refunds to pay down debt.
Only 24.8 percent of the 1,000 consumers who responded said they are more likely to make a luxury purchase of at least $500 than they were three months ago. Just two years ago, 30 percent would have answered yes to that question, Beemer said.
The number of consumers who say they are likely to make a luxury purchase is close to the roughly 23 percent who said they would make such a purchase in the aftermath of the September 11, 2001 attacks, Beemer said.
"I'm really convinced that there is no discretionary spending going on right now. The only spending is replacement spending," he said.
Beemer also said the avoidance of luxury spending might last longer than it did in 2001, as other research he has conducted showed consumers think they will need to wait until after the 2010 income tax filing season to feel better about their finances.
"I think America's in this retail deep freeze," Beemer said. "I think we're going to see it go on for months and months and months."
When it comes to buying food, 74.2 percent said price is a bigger factor when making a purchase than a year ago.
Meanwhile, only 24.2 percent of consumers said they feel they have extra cash in their paychecks due to the U.S. government stimulus package. while 73.7 percent said they did not.
The stimulus package included a tax credit that will be paid to many workers in the form of less withholding tax being taken out of paychecks, though at $400 annually for single workers, that amounts to only $7.69 a week.
The survey was conducted May 1 through May 3.
(Reporting by Brad Dorfman; Editing by Richard Chang)
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