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.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By David Goldman, staff writer

NEW YORK ( -- 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.

"The rebate checks alone won't get us out of a recession, but as a result of the government's monetary policies, consumer spending should increase in the third quarter," said York. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.