According to a new report on the state of the American consumer released today by the National Restaurant Association, although a majority of American consumers are still concerned about the economy and holding back on spending, there are signs that point toward an improving mindset in 2015.
The analysis found that consumers’ assessment of their personal economies trended sideways in recent years. Nearly six in 10 adults say their household finances are either in fair or poor condition, which is essentially unchanged from their appraisal of their finances in 2010, when the economy was in the early stages of recovery.
While this persistent recession mindset dampened consumer spending during the first few years of the economic recovery, the analysis found that a solid majority of American consumers are still reticent to spend. When asked to describe their personal spending behavior right now, seven in 10 consumers say they are holding back either “significantly” or “somewhat” on spending.
“While it’s not surprising to see that consumers remain uncertain about the economy and cautious in their spending habits, the magnitude of the impact and the fact that it cuts across all demographic groups demonstrate the degree to which the Great Recession impacted the psyche of the American consumer,” says Bruce Grindy, chief economist for the Association and author of the report. “Even a majority of individuals in households with annual income above $100,000 report that they are holding back on spending in some fashion.”
Contributing to consumers’ cautious spending behavior is the fact that they are spending a lot of time worrying about their finances. The analysis found that more than four in 10 adults regularly worry about their overall household financial situation, being able to save enough for retirement, and keeping up with their bills.
While Millennials share those same concerns, student loan debt is also top of mind for this cohort. Among 18-to-34-year-olds who have student loans, 55 percent say they worry about the amount of those loans very or somewhat often.
Although consumers’ assessment of their personal economy remains mixed, they are relatively optimistic that conditions will improve in the year ahead. Thirty-four percent of adults say they think their household financial situation will be better in 2015 than it was in 2014, while only 8 percent expect things will get worse.
“On the positive side, the survey suggests that this recession mindset is not a permanent state for consumers, and they will continue to come out of their shell as their personal finances improve,” Grindy added.
While an improving financial situation will enhance consumers’ general ability to spend, the survey also suggests that restaurants will likely be the beneficiaries of some of this increased spending. When asked about their current restaurant usage, roughly four in 10 adults say they would like to be patronizing restaurants more often.
“It’s clear that American consumers haven’t abandoned restaurants, but rather are choosing their visits more carefully until their financial situation improves,” Grindy says. “Given the positive underlying economic fundamentals, as well as elevated levels of pent-up demand among consumers, the stage is set for an improving business environment for restaurants in 2015.”
The analysis is based on a national telephone survey of 1,012 adults conducted Oct. 31 through Nov. 3, 2014, for the National Restaurant Association by ORC International.