Wednesday, May 6, 2009

Cost-consciousness is the new recession luxury

DES PLAINES, Ill. (5/06/09)--The recession has many Americans re-evaluating the way they spend their hard-earned dollars. About half (53%) of respondents to a recent Gallup poll said they are spending less, and 32% predict this behavior will become the new normal pattern once the recession is over ( Apr. 28).

The necessity vs. luxury perception battle had been moving in the luxury direction for decades, but the looming recession has reversed the trend. A report released April 23 from the Pew Research Center Social and Demographic Trends Project revealed that many items previously perceived as "necessities" are getting booted to the luxury list.

The Pew survey showed the number of respondents who categorize common household items--microwave oven, TV, air conditioning, dishwasher, and clothes dryer--as a necessity has dropped sharply from 2006. Further, the percentage of Americans who consider a TV a necessity is the lowest it has been since the question was first asked more than 35 years ago.

Four of five survey respondents have taken at least some belt-tightening measures during the current economic crisis. Here are a few examples of scaled-back spending:

58% switched to less expensive brands or to discount stores;

28% reduced spending on alcohol or cigarettes—two goods often labeled recession- proof;

24% cut back--or eliminated--their cable or satellite TV subscription; 22% followed suit with their cell phone plan;

21% plan to try out their green thumbs and grow veggies;

20% started performing home repairs or yard work they previously hired out; and

16% got rid of unwanted items by holding a garage sale or listing them on the Internet.

For more information, read "Tough Times Series: Steps Before, During Layoff Make It Easier to Cope" in Home & Family Finance Resource Center.

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