In a Time of “No Spare Cash”, Focus on Paying Off Debt and Building Savings

13 September 2006
Schaumburg, IL
      
Americans continue to rank near the very top when it comes to being strapped for cash, according to a new ACNielsen study of consumers in 40 markets worldwide. Nearly one-quarter (22 percent) of U.S. respondents said that once they have covered their basic living expenses, they have no money left over. There is a bright spot: for the first time since the study began in 2004, the U.S. has lost its usual top spot among countries whose consumers have no cash to spare.

   
Markets with Highest Percentage of Consumers Who Have No Spare Cash

*Global Average=13%

Source: ACNielsen Online Consumer Confidence Study
  
The findings are from the ACNielsen Online Consumer Confidence Study, a twice-yearly global survey that gauges consumers’ confidence in the economy, spending and saving patterns, and major concerns. This survey marks the fourth in the series, the first of which was conducted in October 2004.

The percentage of American consumers who say they have no spare cash remains the same from the last survey, conducted in November 2005, after dropping from 28 percent in the May 2005 survey.

The survey also showed that Americans say they tend to funnel what spare cash they do have into savings or debt relief, rather than new clothes or expensive technology purchases. Paying off debts was claimed as the top use of spare cash (41 percent), with putting money into savings close behind at 38 percent.

“While Americans are notorious for overspending and building debt, these findings show a desire for financial responsibility when it comes to discretionary income,” said John J. Lewis, President & CEO, ACNielsen U.S. “Perhaps because the idea of living from paycheck to paycheck is so prevalent, consumers who have a little extra cash would rather use it to shore up their finances than spend it right away.”

This attitude makes an impact when it comes to consumers’ purchases of expensive items. Americans rank second from last when it comes to spending their extra cash on new technology, with only 17 percent saying that’s where their money goes. U.S. consumers also rank in the bottom ten of all markets surveyed when it comes to spending spare cash on new clothes (26 percent) and vacations (25 percent).
  

How Consumers Utilize Their Spare Cash

Source: ACNielsen Online Consumer Confidence Study

“Clearly the rising cost of energy, particularly gasoline, and a slowing housing market are having a negative impact on the US consumer’s purchasing attitudes,” noted Lewis. “Whether this attitude will ever actually materialize in hard economic terms is yet to be seen.”

The ACNielsen Online Consumer Confidence Survey is the largest global survey of its kind, which gauges consumers’ confidence levels, spending habits/intentions and current major concerns. The survey, which took place in June 2006 over the Internet, polled 21,779 respondents in 40 markets: Australia, Austria, Belgium, Canada, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Malaysia, Netherlands, New Zealand, Norway, Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States, Czech Republic, Hungary, and Vietnam.
      
About ACNielsen
ACNielsen, a VNU business, is the world’s leading marketing information provider. Offering services in more than 100 markets, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen’s market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns.