Frugality appears to be the order of the day, but African-Americans and Hispanics are making the biggest adjustments to spending, saving and work habits than any other group as a result of the economic recession, according to a national survey conducted for Citigroup Inc.
The random telephone survey, conducted by Hart Research Associates, found that 63 percent of American consumers surveyed said the way they spend and save has been forever changed; around 60 percent said they would continue to cut back on everyday expenses, would save and invest more, and would continue to cut down on credit-card purchases and reduce debt; and only one-third said spending and saving would go back to the way it was before the recession.
The survey suggested the changes are broadly distributed across all income levels and ethnic groups, with more than half of the people in all income levels saying they have reduced debt and postponed the purchase of a major item such as a car. However, the survey found that Blacks and Hispanics have reduced credit-card spending more than the larger national sample, with 68 percent of Blacks and 66 percent of Hispanics reporting that trend, compared with 62 percent of the national sample. Eighty-two percent of African-Americans have cut back on everyday expenses, compared with 76 percent of Hispanics and 75 percent of the national sample; and about 57 percent of Blacks and 45 percent of Hispanics have taken money out of savings or investments to help pay expenses, a trend reported by 42 percent of the national sample.
In addition, significantly higher numbers of Black and Hispanic workers reported that they are working longer hours to make ends meet. Forty percent of nonwhites reported this trend, compared with 21 percent of the national sample. Those groups have sought more education to improve their employment opportunities in higher numbers with 36 percent of Blacks and Hispanics reporting that they have gone back to school, compared with 21 percent of the national sample.
The survey included 2,005 adults interviewed between Sept. 1 and Sept. 5. It has a statistical margin of error of plus or minus 2.2 percent. Eric Eve, senior vice president of global community relations at Citi, says the survey points to a profound shift in the way people think about monitoring their finances. “The current economic environment is altering, perhaps permanently, the way we think about spending money,” he says.
Americans earning less than $50,000 per year were most likely to cut back on everyday expenses (80 percent), followed by 76 percent for those who earn $50,000 to $75,000. But even at the top of the income scale, people are making adjustments and cutting back on everyday expenses — 70 percent for those who earn more than $150,000 and 68 percent for those who earn $75,000 to $150,000.
Nearly one-third of higher wage earners and slightly fewer — 27 percent — of those at lower pay levels said that they are thinking about postponing retirement because money is tight.