Did you cut costs during the recession? Thankfully, no one was standing in bread lines or rationing goods, but maybe you refinanced your mortgage as rates dropped. Or you canceled that premium channel you never watch, drove to work a little less, packed a lunch you used to pick up at the Subway near the office or cut back on entertainment spending. If so, you might not be alone.
In a new study, Pew Research Center asked participants about household spending since the recession began in 2007. Via telephone interviews, nearly two thirds of respondents said they had cut back on spending, and only 6% said they had increased spending. In the same survey, 54% said they thought we are still in the recession, and 63% said it will take at least three years before their families recover from the financial effects.
It will be a couple of months before the Bureau of Labor Statistics releases its 2009 data on consumer expenditures, but one of two things will happen: The Pew study will be upheld and there will be some obvious declines in consumer spending, or purchasing trends will continue to increase as they did in 2008 with the recession well in gear. That would show that, while people might want to or think they are cutting spending, in practice they're actually spending more.
Spending growth peaked in 2005 with 6.9% growth over 2004's average expenditure of $43,395, according to BLS data. Since then, it has dropped steadily to just 1.7% in 2008. But that was still growth. Broken down by age, only those under 25 and 35- to 44-year-olds dipped, and only by 0.2% and 0.4%, respectively. One of the age groups that really drives the economy, 45- to 54-year-olds, increased its spending a healthy 4.9%.
Will we see spending decrease in a big way when the 2009 data are released? Or, with health care and other costs going up, are we cutting in one place only to spend more overall?
If you did cut costs, where did you do the trimming?