While, as a whole, Americans (75%) say they're still confident they'll be able to maintain their current lifestyle (most probably through smart spending practices), the impact of the cost of gas on households with less than $75,000 of annual income is significant, according to a recent, nationally representative, random-digit-dial survey of 1020 adults conducted by The Boston Consulting Group (BCG).
"The energy shocks have been painful, especially for certain segments of middle- and lower-middle income Americans. Still, they've largely been able to find the extra money each week. Accordingly, they feel pretty confident their finances will stay in control. This underscores Americans' ingenuity when it comes to balancing budgets through better management of spending and an ability and willingness to seek out lower-priced versions of many products and services," said Michael J. Silverstein, a BCG senior vice president and author of the recently released Treasure Hunt: Inside the Mind of the New Consumer (Portfolio, May 2006).
Middle-Income Americans are Being Put to the Test
According to the survey, high gas prices this summer have prompted middle-income families to:
* Change vacation plans: 45% of families with household incomes under
$35,000 have done this, as have 41% of families with income between
$35,000 and $74,000. (Only 27% of families with income between $75,000
and $99,000 and, 16% with income over $100,000, have had to change plans
because of gas prices.)
* Buy less expensive alternatives to products they regularly buy: Half
(50%) of families with income less than $35,000 have done this, as have
38% of families with income between $35,000 and $74,000. (Only 23% of
families with incomes over $75,000 said they're doing this.)
* Cut back on entertainment activities: Half of families with income under
$35,000 have done this, as have nearly half (45%) of families with
income between $35,000 and $74,000. (Just over a third -- 36% -- of
families with incomes between $75,000 and $99,000 have done this, and
only 16% of families with over $100,000 in income have.)
* Delay purchase of an item that isn't absolutely necessary: 61% of
families with income under $35,000, and 54% of families with income
between $35,000 and $74,000 have been delaying purchases. (41% of
families with income between $75,000 and $99,000 have been delaying, as
have 30% of those with incomes over $100,000.)
* Eat out less: More than half (55%) of families with income under
$35,000 have been eating out less, as have nearly half (47%) of families
with income between $35,000 and $74,000. (32% of families with income
between $75,000 and $99,000 said they are eating out less, as are 26% of
families with income over $100,000.)
* Seek recommendations on good deals from friends and family: The majority
(57%) of families with income under $35,000 are doing this, as are
nearly half (47%) of families with income between $35,000 and $74,000.
(37% of families with income between $75,000 and $99,000 are seeking
recommendations, as are 36% of families with income over $100,000.)
* Hold back from impulse purchases: 60% of families with income under
$35,000 are doing this, as are 55% of families with income between
$35,000 and $74,000. (This is also true for 44% of families with income
between $75,000 and $99,000 and 30% of families with income over
$100,000.)
* Scale back on spending habits or lifestyle in general: 67% of families
with incomes under $35,000 are doing this, as are 55% of families with
income between $35,000 and $74,000. 42% of families with income
between $75,000 and $99,000 are doing this, as are only 26% of Americans
with household incomes over $100,000.
While They're Generally Confident About Maintaining Lifestyle, Many Worry About Money When They Go to Bed at Night
Despite all the cutting back and spending changes, particularly among middle- and lower-middle income Americans, the majority of Americans -- at all income levels -- are confident they'll be able to maintain their lifestyles in the face of rising gas prices, according to the survey. But there exists uneasiness: 64% of Americans with household incomes under $35,000 often or sometimes worry about having enough money when they put their heads on the their pillows at night, as do 45% of Americans with household incomes between $35,000 and $74,000. 39% of Americans with household incomes between $75,000 and $99,000 worry in this way, as do 27% of Americans with household incomes over $100,000.
The Silver Lining: Americans are Savvy Spenders
"Contrary to what a lot of people believe, Americans are good with money. Not only are they good at shifting spending to accommodate shocks, but they're also always on the lookout for new, higher-value vendors -- ones that provide good products and services at a low price. Companies need to pay close attention to that tendency: Seemingly loyal customers can be gone in a flash when a competitor with lower prices and commensurate quality appears," said Mr. Silverstein.
Mr. Silverstein's book, Treasure Hunt, explores how middle class consumers seek out good quality products and services in nearly every category, from clothing and luxuries to food and hotel rooms, at significantly low prices. It shows how American consumers save over $100 billion per year through smart spending.
Survey Methodology
The public opinion data reported in this study are the result of a random and representative telephone survey conducted July 6-9, 2006, with 1,020 adult Americans, 18 years of age and older, living in the continental United States. The survey was designed in collaboration with Michaels Opinion Research, Inc.
Interviewing was conducted from a central telephone facility utilizing a random-digit-dial (RDD) sampling methodology to ensure that both listed and unlisted telephone numbers were included. All sample numbers selected were subject to up to four attempts to complete an interview.
Survey results have been weighted by four variables (age, sex, region and race) for reliable and accurate representation of the total U.S. population.
The margin of error for results based on the national sample of 1,020 is +/- 3 percentage points and is greater for smaller sub-groups of respondents.
