Findings part of new Citibank Economic Pulse
Today’s survey findings were released as part of the new Citibank Economic Pulse, a quarterly measure of Americans’ attitudes toward the economy. Citi first began compiling data for the Pulse in September 2009 to better understand changes in the needs of the consumers and communities the company serves. Overall, the Pulse, which combines eight survey questions into a single measure of overall economic status and future outlook, moved up eight points, the largest move since tracking began in 2009, but remains in negative territory at –6. All components of the Pulse moved upward except Americans’ comfort with their level of debt, which remains unchanged. The biggest change is in future expectations of the economy, while evaluations of current conditions advanced far more modestly.
The Economy: Is Light on the Horizon Sustainable?
This uptick in optimism since September is reflected in a number of areas, including:
- Personal financial situations: 70 percent are somewhat or very optimistic that their own financial situations will improve this year, up 6 points, while 27 percent are somewhat or very pessimistic their financial situations will improve, a decline of four points.
- Consumer Demand: The percentage of Americans who believe it is a good or excellent time to make a major purchase, such as furniture, an automobile or a television, increased four points to 36 percent. A 62 percent majority believe is it only a fair or poor time to make a major purchase. This is four points less negative than in September 2010.
Yet, Americans’ optimism is tempered. While nearly a third (33 percent) expect 2011 will be “financially better,” 52 percent expect the year will be “financially the same” as 2010 and 14 percent expect it to be worse.
- Employment opportunities: Just 16 percent rate employment opportunities as “excellent” or “good,” an increase of 2 points. Although the most negative assessments, “poor,” have declined 6 points to 45 percent, another 37 percent rate employment opportunities “only fair”, which is a 4 point increase.
- The survey finds a 59% majority believes the economy still has a ways to go to hit bottom, a decline of five points, while 38 percent believe the economy has pretty much hit bottom, an increase of 7 points.
“For the first time in a year, the survey has revealed clear signs that consumers are starting to see light on the horizon,,” said Michelle Peluso, Chief Global Consumer Marketing and Internet Officer, Citi. “While Americans are positive about their own future, they continue to have concerns about the broader economy. The downturn’s impact on priorities and behavior has been profound and appears to be more permanent than in previous recessions that were shorter and not as deep.”
Optimism Up Across All Income Groups, Rising Most in the South
Americans in the South are the most optimistic about local business conditions in the coming 12 months (67 percent expect improvement) and experienced the biggest increase with a 17-point gain since September. By contrast, 62 percent in both the Northeast and the West (representing a 10 and 11 point gain, respectively) and 59 percent in the Midwest (representing a 7 point gain) expect conditions to improve.
Americans with the highest incomes, those earning over $150,000, show the greatest increase in optimism, with a full 76 percent saying local business conditions will improve in 2011, a 23 point gain. Optimism is up by at least 8 points across all income groups. Americans making under $50,000 are significantly more optimistic than they were in September, with 61% expecting improvements, representing a 12-point gain.
Top Financial Priority of 2011: Reducing Debt
Although Americans are feeling slightly more comfortable with their level of savings, the survey found that Americans remain constrained by debt. While comfort with their level of savings marginally improved, comfort with their current level of debt was unchanged from four months ago and reducing debt topped the list as the top financial priority for the year.
- 50 percent of Americans are somewhat or very comfortable with their level of savings, up four points since September, while 49 percent are somewhat or very uncomfortable, a decline of three points.
- 60 percent of Americans are somewhat or very comfortable with their level of debt, unchanged from four months ago; 38 percent remain somewhat or very uncomfortable.
- 29 percent of Americans report that reducing their overall level of debt is their top financial priority for the year. Other top priorities were putting more money into long-term savings (24 percent), lowering monthly expenses (24 percent) and being able to meet monthly expenses (19 percent).
“Over the past year, we’ve seen an abundance of financial caution among consumers, despite indications that the economy has been improving,” said Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management. “The Great Recession was a financial wake-up call for many Americans who have embraced, whether by necessity or by choice, the idea of living within their means. That may be a smart move for individual households. But it could put a damper on overall economic growth.”
Bad Financial Habits to Break in 2011: Impulse Spending Tops List
When asked what bad financial habits they’d like to break in 2011, 25 percent of Americans responded they’d like to stop spending on things that they don’t need; 11 percent would like to start keeping track of daily spending; 10 percent would like to develop and stick to a budget; and 9 percent want to stop spending more than they earn.
Citi conducted this nationwide survey as part of its ongoing effort to better understand changes in the needs of the consumers and communities the company serves.
