New Report On Consumer Spending Shows Shift In Value And Values

American Express launches Spending and Saving Tracker to monitor consumers’ changing priorities

NEW YORK - While the economy continues to struggle toward recovery, American consumers remain cautious about opening their wallets. While 60 percent of respondents who participated in the first American Express Spending & Saving Tracker said they intend to spend about the same or more in the next 30 days, (compared to the last 30 days), 40 percent plan to spend less.

Today’s American Express Spending & Saving Tracker is the first in a monthly series of reports about consumers’ views about the economy and what is motivating them to spend and save. The research sample of 2,032 adults surveyed the general U.S. population(1), as well as two sub-groups -- the affluent(2) and young professionals(3).

Key findings included:

* Young professionals were more optimistic about the economy and more likely to increase spending during the next 30 days (24 percent versus 14 percent of the affluent and 10 percent of the general population).
* When young professionals who plan to spend more were asked what they would be spending it on, two thirds said clothing (65 percent), and more than half said dining out (54 percent) and travel (53 percent).
* Among the general population, about one-half of consumers who expect to spend more said they plan to increase their spending on groceries and clothes (49 percent each).
* The affluent who expect to spend more said it would be on travel (56 percent), dining out (47 percent) and clothes (43 percent).

“One year after the collapse of the financial markets, the American Express Spending & Saving Tracker shows that there has been a shift in how consumers are expressing their wants and needs,” said Pamela Codispoti, American Express Senior Vice President and General Manager, Cardmember Services. “We may now be at a point when many consumers have taken stock of their financial situation and have a better handle on what their spending and saving plans are in the current economy. I don’t think anyone expects the American consumer to quickly return to the spending levels of the last few years, but amid their cautiousness we are seeing some areas where people are willing to increase spending.”

Consumers Sort Wants from Needs
The American Express Spending & Saving Tracker asked consumers to compare their priorities versus one year ago, and found a significant shift.

* Car maintenance showed the single most significant jump in priority (up 37 percentage points). Forty-two percent named it as a high priority today, but only five percent said that automobile maintenance and care was a high priority one year ago.
* The second highest shift was related to grooming, which rose 28 percentage points in priority. Forty-six percent said salon hairstyling and grooming was a high priority today; only 18 percent of adults said that it was a high priority one year ago.

Several items also were downgraded in priority.

* Among the general population, the greatest number of consumers said their top priority expenses one year ago were vacations (25 percent) and dining out (24 percent). Today, only seven percent named vacations as a high priority and dining was named as a high priority for only eight percent.
* However health and home expenses, like buying organic food and home maintenance were on the rise even as consumers traded down or out on other items.

From Spenders to Savers
Mirroring the fact that U.S. personal savings rates have moved from negative territory to four percent in July, the survey found that consumers’ intend to strengthen their household balance sheet. When asked what they would do with $500 of found money, one-third of consumers said they would pay off their regular monthly bills. One-in-four said they would apply it to pay off credit card debt or save it (26 percent each).

When comparing responses of the affluent to the young professionals:

* Thirty-three percent of young professionals would put found money toward their credit card debt, compared to 26 percent of the affluent, but…
* More young professionals than affluents would use the money to go on a shopping spree (16 percent versus 6 percent).

The survey also assessed consumers’ spending plans on large purchases (over $500). Here again, young professionals showed the most willingness to spend. Only one-in-seven (15 percent) respondents in the general population plan to make a large purchase in the next 30 days. The spenders were predominantly young professionals (38 percent versus 24 percent affluent). Young professionals also planned to spend more on those purchases ($2,460) than their affluent counterparts ($2,170).

So far, consumers are showing restraint when it comes to early holiday shopping. When asked what discount level would motivate them to begin their holiday shopping at retail stores in the next 30 days, the overwhelming majority (69 percent) said they would not be motivated by a department store discount. Of that group 44 percent feel it is too early to start holiday shopping, including 52 percent of affluent and 48 percent of young professionals.

Finally, among the 40 percent of respondents who said they would spend less in the next 30 days, the top three reasons were “trying to save money,” “reducing debt,” and that they “have the money but feel now is not the time to spend.”

Empathy Breeds Frugality
When asked what has been the most significant impact of the economic downturn, the overwhelming majority of the general population (74 percent) cited “seeing family and friends affected by the recession.” In fact, more people cited this reason than “losing their job” (30 percent), “losses in the stock market” (54 percent), and “losses in retirement or 401K savings” (56 percent).

The American Express Spending & Saving Tracker research was completed online among a random sample of consumers aged 18+. The research sample of 2,032 adults surveyed the general U.S. population, as well as two sub-groups -- the affluent and young professionals. Interviewing was conducted by Echo Research between August 28 and 30, 2009. Overall, the results have a margin of error of +/- 2.2 (or 4.2 among affluent and 4.4 among young professionals) percentage points at the 95 percent level of confidence.

About American Express
American Express Company (www.americanexpress.com) is a leading global payments, network and travel company founded in 1850.

(1)The research was conducted online between August 28 – 30, 2009 among a random sample of 2,032 adults aged 18 and older.
(2)Affluent - defined as having a minimum annual household income of $100,000.
(3)Young Professional - defined as less than 30 years of age, having a college degree, and a minimum annual household income of $50,000.