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The Great Recession of 2008: Our financial wake-up call?

October 25, 2010
Jonathan Clements, Director of Financial Education, Citi Personal Wealth Management

The recession may be technically over, but Americans' economic anxiety continues--and we could be witnessing the long-awaited return to financial prudence.

A new nationwide survey, conducted for Citi by Hart Research Associates, finds Americans plan to continue tightening their belts over the next six months, with 59% saying they will spend less on eating out, 51% cutting back on clothing expenditures and 50% saying they will reduce the amount they spend on vacations. In fact, 49% of those surveyed report they either avoid shopping altogether or they shop only for what they absolutely need.

Instead, Americans seem increasingly committed to paying down debt and piling up savings. Despite the improving economy, 38% say are uncomfortable with their level of debt and 52% say they are uncomfortable with their level of savings. Both figures are higher than three months ago.

And this doesn't seem to be a passing fancy. Among those surveyed, 51% say the changes they've made to their saving and spending habits are permanent. Indeed, when the economy begins to stabilize, 29% of Americans are looking forward to saving more and 18% plan to pay down debt. By contrast, just 16% say they look forward to making a major purchase and just 16% say they look forward to going on vacation.

The implication: The Great Recession of 2008 could prove to be the financial wake-up call for our generation, comparable to the impact of the Great Depression of the 1930s on earlier generations. But this, alas, is a good news-bad news story. It's great to see Americans embrace financial prudence. It's a shame this has to occur when the economy is weak--and more consumer spending could potentially hasten the recovery and bolster the job market.

Jonathan Clements is Director of Financial Education, Citi Personal Wealth Management.

NOTE: Survey Methodology Hart Research Associates conducted the telephone survey of 2,001 adults nationally from September 14-19, 2010. The Random Digit Dialed (RDD) survey has an overall statistical margin of sampling error of plus or minus 2.19 percentage points. The survey also included a sample of respondents who use only a mobile telephone.

The information provided is solely for informational purposes. It is not an offer to buy or sell any of the securities, insurance products, investments, or other products named.

© 2010 Citigroup Inc. Citi Personal Wealth Management is a business of Citigroup Inc., which offers investment products through Citigroup Global Markets Inc. ("CGMI"), member SIPC. Insurance is offered through Citigroup Life Agency LLC ("CLA"). In California, CLA does business as Citigroup Life Insurance Agency, LLC (license number 0G56746). CGMI, CLA and Citibank, N.A. are affiliated companies under the common control of Citigroup Inc. Citi and Citi with Arc Design are registered service marks of Citigroup Inc. or its affiliates.

INVESTMENT AND INSURANCE PRODUCTS: NOT FDIC INSURED • NOT A BANK DEPOSIT • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NO BANK GUARANTEE • MAY LOSE VALUE

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