These results are similar to those from the Index survey in October, when a $700 billion economic bailout plan was under consideration. Sixty-three percent of October respondents said that they did not feel confident that the economic bailout plan would have a positive effect on their personal financial situation, and 50 percent did not believe that the bailout plan would help stabilize the U.S. economy.
"Taken together, the results from the October and February surveys suggest that most American families do not believe that the actions the U.S. government is taking to stabilize the economy will be effective for either the national economy or their own personal finances," said Scott Spiker, CEO of First Command. "In fact, the Index continues to reveal that consumers are taking control of their own finances by cutting household expenses and saving money."
February respondents indicated they were cutting back by reducing leisure activities (63 percent), reducing clothing purchases (56 percent) and attempting to reduce their electric bills (48 percent). Families are also shopping smarter: 47 percent increased their use of coupons, 56 percent shopped at discount stores, 37 percent used cash or debit instead of credit and 19 percent cut up their credit cards. Fifty-eight percent of households said they will continue to cut back for at least one year, and 16 percent of respondents said they have cut back for good.
Will this change in consumer behavior last? Seventy-four percent of respondents said they agreed that the current recession will lead to long-term reduced spending by Americans. And out of that group, 43 percent said this is a good outcome.
"Americans understand that it’s time for a change in the way they spend money," Spiker said. "We’ve been on a 15- to 20-year binge. It’s going to be a long hangover."
As we move into 2009, an increasing number of Americans are feeling the negative effects of the economic turmoil. Sixty-eight percent of February respondents said they lost money in their retirement accounts, up five points from 63 percent in January. And 51 percent said they lost money in stocks, up from 47 percent in January.
Interestingly, financial confidence has been strengthening among those who are planning for the future. In December 53 percent of respondents with a financial plan said they did not feel financially stretched, up from 48 percent in September. Confidence among those without a plan actually slipped four points to end the year at 33 percent.
