The Endangered American Lifestyle

This economy has clearly shown that the lifestyle of most middle and working class Americans is precarious.  Many Americans now admit they could cover their bills for at best two months if the pink slip arrived in their paycheck. More and more people are dipping into their savings and credit to pay for food, gas, and day-to-day expenses if they are fortunate to have either.

A series of recent surveys checking the health of American households have found many of our neighbors are depressed and frightened about their financial status as the recession deepens and unemployment numbers worsen.  It appears Americans are downsizing their lives, their expectations, and their idea of what it means to live the American Dream.

Market Watch reported today on a number of findings about the financial health of Americans and their preparedness in light of the poor job market.   As things get worse, more and more Americans will find themselves falling behind in their bills and house payments.  Households are adjusting their buying habits and trying to find ways to save money “just in case”.

This is flashing so bright red,” said Paul Ballew, senior vice president of Nationwide Insurance Co. “Roughly 60% of the population was ill-prepared (financially) before the meltdown.”

A MetLife study released last week found that 50% of Americans said they have only a one-month cushion — roughly two paychecks — or less before they would be unable to fully meet their financial obligations if they were to lose their jobs. More disturbing is that 28% said they could not make ends meet for longer than two weeks without their jobs.

And it’s not just low-income earners who would find themselves financially challenged. Twenty-nine percent of those making $100,000 or more a year said they would have trouble paying the bills after more than a month of unemployment.

Meanwhile, more than four in 10 respondents told pollsters in a recent Pew Research Center study that job-related issues were the nation’s most important economic problem.

Lower-income Americans have already started belt-tightening to feed their rainy day funds.  One study has shown these income levels are now planning for vacations at home and have put off any major purchases.  The same study (by Pew) finds that upper middle income Americans are desperately re-arranging their retirement funds in hopes of preserving what capital remains after nearly six months of persistent market declines.  Lower-income Americans have switched to plain label and generic brands while upper middle income Americans have quit dining out.  American families continue to belt tighten where ever possible.   What is new about this typical recession behavior is that this new found thrift appears  to be a long run arrangement.

America’s Research Group found that nearly 57% of the consumers it polled said they would spend less this year while virtually no one plans to spend more.

But this is not just a one-year thing, according to consumers surveyed by BIGresearch. Nearly 91% said they see this crisis bearing down on their spending decisions — in effect, their lifestyles — over the next five years.

Fifty-five percent said they will think carefully before they make a purchase and 51% said they expect to be more price-conscious when buying clothing and food.

“American consumers are hunkered down, bracing for a depression,” said Britt Beemer, chief executive of America’s Research Group. “The dramatic drops in shopping levels have no match in our database in the last 30 years.”

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