Financial pain hits close to home
30% of Americans say the economic slowdown is forcing them to cut back on food, medicine and other daily necessities, according to a new poll.
NEW YORK (CNNMoney.com) -- The slumping economy is hurting Americans where it hurts the most: daily necessities like food and drugs.
A national CNN/Opinion Research Corp. poll released Thursday found that 30% of respondents are trimming their spending on food and medicine and that 57% are worried they will have to cut back soon. Nearly half said they have cut back on how much heating or electricity they use in their homes, and 53% are concerned that they will have to trim spending on heating in the future.
"Consumers are definitely feeling a pinch on rising prices of staple products like food," said Wachovia economist Adam York. "There are some consumers that are having some real trouble in this environment"
Shifting spending habits. Rising prices and declining home values have left Americans strapped for cash. Of the more than 1,000 American adults surveyed in the poll, conducted March 14-16, 31% have curtailed their spending on utilities. Further, 59% said they have cut back on clothing purchases. As economists expect to happen in a downturn, 75% have spent less on leisure activities, and 61% have postponed major purchases such as furniture or appliances.
Consumers have shifted their spending from discretionary items like electronics and vacations in order to continue paying for food and drugs.
According to York, discretionary spending has reached an historic low, not seen at these levels since the early 1980s. A U.S. Commerce Department study has shown retail spending slipped 0.6% last month.
"Core spending has mainly remained high," said York.
Nothing left to trim. But that may now be changing.
For instance, a recent Commerce Department report shows that consumers' food and beverage spending dropped 0.2% in February from the previous month and grocery store sales fell 0.3%.
"Instead of buying steak, they're buying chicken," said York. "People are buying generics and reducing spending by shifting to cheaper alternatives."
Many American expect that they will need to cut back on discretionary items when times are tough, but trimming spending on necessities is a concern. Although 23% said they are "very worried" about cutting back on utilities" and 25% said the same about reducing clothing purchases, 36% said they are "very worried" about cutting back on daily necessities and 34% said the same about heating their homes.
Help is on the way. But consumers may not feel the pinch for much longer.
Tax rebate checks are on their way, which the government expects will help boost the economy. Though they may only show temporary relief, many economists expect to see a jump in consumer spending this summer.