A new nationwide survey issued today by Citi revealed that while 74 percent of Americans consider themselves financially stable, more than 48 percent do not have the savings they say they need to achieve actual stability. More than half (51 percent) say that number is less than $100,000 and more than one in five (22 percent) believe it to be less than $10,000. Americans understand the importance of savings – 76 percent say it is very or extremely important – but nearly two-thirds have no savings goals and 25 percent say they expect to save $0 in 2012.
Many Americans, especially those with lower incomes, struggle to save as much as they think they should. Half of Americans (51 percent) realize that they do not save as much as they should, while just one-third (33 percent) say they do save as much as they think they should. This is especially true at lower income levels. Just 25 percent of Americans earning under $50,000 say they are saving as much as they think they should.
The survey, conducted by Hart Research Associates, also found that 58 percent of consumers believe local business conditions in their area will improve over the next 12 months, an 11-point increase from November 2011. And 65 percent are optimistic that their own financial situation will improve over the next 12 months, a three-point uptick. Both increases mirror a similar surge of optimism in the first quarter of 2011 that was then followed by a steady decline.
Citi Economic Pulse: Q1 Rise in Optimism – a Lasting Shift or Another Temporary Uptick?
These findings were released as part of the Citi Economic Pulse, a quarterly measure of Americans’ attitudes toward the economy. The Pulse, which combines eight survey questions into a single measure of overall economic status and future outlook, moved up 8 points from Q4 2011, matching the largest move since tracking began in 2009, but remains in negative territory at negative 6 – the same level as Q1 2011. All components of the Pulse moved upward except Americans’ comfort with their level of debt, which remains unchanged.
“It is good news that Americans recognize the importance of simplifying their financial lives and saving in order to be financially secure, but the counter to that is many do not have savings goals or don’t plan to save anything in 2012,” said Michelle Peluso, Chief Global Consumer Marketing and Internet Officer, Citi. “When it comes to overall consumer optimism, there was an across-the-board rise in the first quarter of 2012, and the big question there is whether that increase marks the beginning of an upward shift in confidence or reflects a temporary uptick as it did last year.”
Tax Refunds Will be Saved Not Spent
While many Americans say they will not save in 2012, many of those getting a tax refund plan to save it or use it to pay bills or debt. Most (55 percent) expect or have already received a refund, and more than half say their top priority for it is to either save or invest it (29 percent) or pay off debt with it (22 percent). A quarter (25 percent) plan to pay bills with it and only 8 percent say they will use it for a new purchase and 7 percent say they will use it to take a vacation. Of those that expect a refund or already received one, 27 percent say it will be less than $1,000, 17 percent expect between $1,000 and $2,000, 12 percent expect between $2,000 and $3,000 and 25 percent expect more than $3,000. The other 19 percent are unsure what they will get back. The average expected refund is $2,675.
Americans Value Simplicity When it Comes to their Finances
A vast majority of Americans say that simplifying their financial lives is very important or somewhat important to them (75 percent). The factors they say most simplify their finances are: not owing money (35 percent), having control of spending (19 percent), having a clear, long-term financial plan (16 percent), and being able to manage their money anytime and anywhere (14 percent).
Financial simplicity is most important to those that struggle to save. Of those that fell short of their savings goals last year, 84 percent say simplifying their finances is very or somewhat important, including a 57 percent majority that says very important. By comparison, only 35 percent of those that met or exceeded their goals last year said that simplifying their finances was very important. And spenders are more likely than savers to identify simplifying their finances as important (79 percent to 73 percent).
Gas Prices Dwarf Other Impacts on Households
Seven in ten of Americans say a change in gas prices has a major effect on their households (71 percent). That is more than double the response of any other oft-cited factors, including interest rates (32 percent), the employment rate (30 percent), home prices (29 percent), and sales and discounts in stores (28 percent). Barely one in five Americans identify an increase in stock market prices (23 percent) as having a major effect, and 27 percent say that stock market prices do not affect their home and don’t change their view of the economy.
“The long decline in home prices, coupled with the weakness in the job market, has probably had a far bigger impact on most Americans’ sense of financial well-being than the recent spike in gas prices,” says Jonathan Clements, Director of Financial Education for Citi Personal Wealth Management. “But maybe we’ve grown used to the weak housing and job market, whereas higher gas prices are not only in the news, but also they hit us in the wallet every time we fill up the tank.”
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.
Hart Research Associates conducted the telephone survey of 2,001 adults nationally from March 13-24, 2012. The Random Digit Dialed (RDD) survey has an overall statistical margin of sampling error of plus or minus 2.19 percentage points. The survey also included a sample of respondents who use only a mobile telephone.
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 bank, 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.
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