A new nationwide survey issued today by Citibank finds consumer optimism about the economic future has rebounded seven points since August, with nearly half of American consumers (48 percent) expecting local business conditions to improve over the next 12 months.
Although consumers’ outlook improved from record lows, the survey, conducted by Hart Research Associates, found that the assessment of current local economic conditions remains negative and doubts persist that a bottom has been reached. Just 26% of consumers believe that the economic downturn has reached its bottom while a large majority, nearly seven in ten Americans (69 percent), continues to believe we have not yet hit bottom.
Despite the sluggish pace of recovery, a majority of Americans believe in the country’s future economic recovery. Fifty-nine percent of consumers believe America can regain its status as a global economic leader. Only 20 percent believe America has permanently lost its place as an economic leader. In another sign of budding economic optimism, 32 percent say they are confident their children’s generation will live better than they do, up from 27 percent in August.
“While consumers’ outlook on the economy today remains gloomy, it is encouraging to see their future outlook improving,” said Michelle Peluso, Global Consumer Chief Marketing and Internet Officer at Citi. “Citibank’s new survey shows a resilience among the vast majority of Americans, who believe the future will be better despite the tough economic conditions they are facing today, and see investing in education, innovation, and job creation as keys to recovery and long-term competitiveness.”
Citibank Economic Pulse: Up from Summer Lows
The Citibank Economic Pulse, a quarterly measure of public attitudes toward the economy, rose three points since August to -14, when it reached the lowest level in its two-year history. The largest gain in the Pulse, which combines eight survey questions into a single measure, comes from a 7 point improvement in the outlook for future local business conditions. The optimism was seen largely among higher-income consumers (those earning more than $150,000), who advance 13 points to 56 percent, and among middle-income consumers ($50,000-$75,000), who advance 14 points to 51 percent.
Among the survey’s key economic findings:
- Current local economic conditions unchanged: Just 22 percent of Americans rate their local economy as good, while 77 percent rate their local business conditions as either only fair or poor, nearly identical to levels in January and August.
- Just getting by: Nearly one in five Americans (19 percent) indicate they are coming up short on monthly income, while 39 percent indicate they are just getting by and 40 percent are making enough to save.
- Savings and debt: Comfort with current level of savings (47 percent) and debt (62 percent) are relatively unchanged since August.
- Local employment opportunities: A full 83 percent rate local employment opportunities as only fair or poor, up two points since August.
- Poor time to buy: Only 3 in 10 Americans continue to believe this is a good time to buy a major household item, such as an appliance or automobile, virtually unchanged since August.
“You get the strong sense that Americans want to get their financial houses in order, but economic conditions are making it tough,” said Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management. “Despite continued modest economic growth, many people are struggling to make ends meet and even those with jobs are feeling economically anxious.”
Regaining Economic Leadership: Invest in Education, Innovation and Job Creation
In addition to looking at how the downturn has affected consumers’ personal financial situation and economic outlook, the survey explores their broader perspective on the downturn’s impact on America as an economic leader.
The survey found:
- A 63 percent majority say it is very or extremely important that the United States be the world’s economic leader, although just 16 percent currently view it as such.
- 59 percent believe America has lost this status but can regain it in the future. Only 20 percent believe America has permanently lost its place as the global economic leader and is now one nation among many.
- 69 percent believe it is very or extremely important to be the world leader in technology and innovation, followed by democracy and freedom (64 percent) and military leadership (60 percent).
To regain leadership, Americans believe it is most important to:
- Invest in education, particularly in math, science, engineering and technology (40 percent)
- Invest in technology-driven innovation and job creation (23 percent)
- Increase financial industry lending to businesses (10 percent)
- 9 percent said government job creation programs and the resilience of the American people are important.
Americans also indicated that the best signal that America is returning to leadership in the global economy is:
- Congress working together to solve our problems (28 percent);
- A decline in the unemployment rate (26 percent);
- A reduction in the federal budget deficit (22 percent) and an increase in manufacturing output (20 percent).
- A strengthening of the dollar (13 percent), a reduction in the trade deficit (12 percent) and a steady increase in the stock market (6 percent) were also noted.
“The unwavering optimism that defines the American character is clearly evident in the survey’s results,” added Clements. “The vast majority of consumers believe America can regain its status as an economic leader. Consumers are anxious for signs that the economy is improving and are watching the deficit and the employment rate in particular for movement that could indicate recovery.”
2012 Financial Plans & Lesson Learned: Save, Save, Save
According to the consumers surveyed, the importance of saving was the most important financial lesson learned from the recession (16 percent), as well as the top financial change they plan to make in 2012 (21 percent). Other changes planned for 2012 include reducing debt, getting a new or better job to earn more money, and getting better at budgeting expenses (14 percent each).
Americans Recognize the True Holiday Spirit
According to the survey, holiday spending is expected to nearly match 2010. Nearly half of Americans (47 percent) expect to spend less on holiday gifts than last year, while 45 percent expect to spend about the same. Just 6 percent plan to spend more. These numbers are little changed from 2010.
- On average men plan to spend $940 and women plan to spend $706 on the holidays this year.
- 69 percent of consumers hope to pay right away for their holiday purchases, while 20 percent expect to pay off the holiday debts within a month or two. Only 7 percent expect to go into debt for more than a few months.
Reflecting the true holiday spirit, when asked what they want for the holidays, Americans are most likely to mention non-material gifts: time with family and friends (14 percent), good health for those close to them (8 percent), peace on earth (5 percent) and happiness or joy (4 percent). Clothing (4 percent) and a new job or family and friends finding work (4 percent) were also mentioned. Most Americans (92 percent) believe it is better to give gifts than to receive them.
The Citibank Economic Pulse survey is a quarterly survey focused on consumer sentiment regarding the current and future economic environment. The Random Digit Dialing (RDD) survey was conducted by Hart Research Associates from November 14-21, among a random sample of 2,003 adults nationally. The design includes interviews with mobile phone respondents. The margin of error for the entire sample is approximately +/- 2.2 percentage points. The margin of error is higher for subgroups. In addition to sampling error, surveys are also subject to many other sources of bias or error, including sampling coverage error, recording error, and respondent error.
The Citi Economic Pulse is calculated by subtracting negative responses to each item from the positive responses for 8 Pulse items, divided by 8. The 8 Pulse items include: current condition of the economy in area; business conditions in area over the next twelve months; current employment opportunities in area; buying climate for big ticket items; personal financial situation compared to a year ago; outlook on personal financial situation for the next twelve months; comfort with current level of savings; and comfort with current level of debt. The Pulse scale can range from +100 (if every respondent gave positive response to each of the 8 questions) to -100 (if all respondents expressed consistently negative views).
Citi, the leading global financial services company, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://new.citi.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi
Liz Fogarty, 212-559-0486
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