Dull Thanksgiving Another Signal of Consumer Retrenchment

Maybe consumers are just feeling less thankful but, even if family and dining at home have gotten a boost from the recession, Turkey Day hasn’t. Concerns about the economy may lead to belt tightening rather than the belt loosening for Thanksgiving.

The September version of the First Command Financial Behaviors Index report, which regularly surveys 1,000 consumers across the United States aged 25 to 70 with annual household incomes of $50,000 or more, demonstrates that 45 percent of middle-class families will reduce Thanksgiving spending as a result of the economy. The most popular money-saving moves include:

• Stay closer to home at 55 percent
• Dine only with immediate family at 50 percent
• Spend less on food at 36 percent
• Stick to a set budget at 27 percent
• Go to someone else’s house for dinner at 23 percent
• Serve a “pot-luck” dinner at 20 percent
• Spend less on decorations at 20 percent

The fact that Americans would go so far as to skimp on Thanksgiving indicates that they are fundamentally rethinking how they conduct their lives, more indication that behaviors prompted by the recession with linger after it is over, said Scott Spiker, CEO of First Command Financial Services.

Reflected in the Thanksgiving decisions, Spiker told Bnet, is a series of behavior-related developments that have arisen over the past year. Among the more interesting, he noted, has been the third-quarter change in the savings “leg” of the reduced spending/increased saving/debt reduction stool that is supporting consumers in the new financial position they’ve adopted. As the realities of unemployment and forced furloughs weigh on American family budgets, Spiker said, a decline in the amount of actual monthly savings and investments accomplished became evident, despite consumer intentions to put away more money. Yet, consumers were managing to pay down debt and reduce spending. He said third quarter trends suggest that the drop in savings and investments may be temporary and that a turn around is in store for in the fourth quarter. While that may be good for personal financial security, consumers turning to more savings as they cut dept and reduce spending would mean that the recovery is going to be long and slow for retailers.

Other developments Spiker associates with current consumer mind set evolution include:

• The percentage of Americans who reported that that their credit spending limit was reduced in the period beginning December 2008 and extending through the third quarter of 2009 increased along with the proportion of those reporting they had lost their jobs.
• The percentage of people who say they have permanently cut back on spending has risen nine points from February, when it was at 14 percent to September, when it hit 23 percent.
• Certain cutting-back behaviors have increased slightly this year, with the percent of consumers who increased use of coupons gaining six points, the percent who say they buy generic gaining two points and the percent  who say they shop at discount stores gaining two points in the third quarter. What’s particularly interesting, said Spiker, is that the changes consumers reported in the study were specific and seemed to be relatively small – and most likely easier – to make.