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Consumer Sentiment

Is the Economic Storm Over? Consumers Weigh in on the “New Frugality”

October 2009
Consumer Sentiment
Is the Economic Storm Over? Consumers Weigh in on the “New Frugality”

For the past six months we’ve seen and The new frugality
heard about the recovery of the U.S. market: Similar to what we’re seeing with the
the DOW has ticked up and the Fed chair outlook to the upcoming holiday season,
has said the recession is “likely over.” But the majority of consumers are saying this
ultimately, the consumer will determine is just not the time to buy. When posed
when our economy is back on track when with a very simple fill-in-the-blank prompt:
you consider that consumer spending “At this moment, the time to buy the
accounts for roughly 70 percent of U.S. things you want and need is…” the panel
economic activity. Until the consumer responded heavily with “not so good.”
starts spending again, the recovery is likely Combine that with those who said the
to be slow and it may feel like we’re in a timing was downright “bad,” and you’re
weak economy for some time. To get a looking at 71% of respondents telling us
closer look at the consumer’s financial they are no position to buy right now.
outlook and their going-forward intent, Spending and saving less
Nielsen Claritas surveyed more than 2,500 These responses underscore the consumer Between pulling back on spending and
consumers, including 500 households that confidence index which began to drop in working to consolidate debt, the average
saw their personal financial institution May and continued to drop through much consumer is getting squeezed.
impacted by a takeover or acquisition. What of the summer. Even back-to-school shopping
we found was that while the intensity of was lackluster despite a slight rise in that In the past six months…
the economic panic had subsided since sector in August. The prevailing mood could • One third say they have used credit less
2008, concerns persist and new habits in likely be summed up by one respondent who • Only 13% say they have used credit more
spending and saving are solidifying. noted bluntly: “I will not be making any • Consumers indicate they have controlled
large-item purchases for a long while.” spending by using cash, debit and check as
methods of payment
At This Moment the Time to Buy the Things You Want and Need is... • 27% say they have saved less
• 22% say they have been able to save more
• 16% say they contributed less to
Excellent 3%
retirement over the last 6 months

Good 23%
Even when conditions improve in the
future, consumers are viewing the use of
Not So Good 44%
credit cautiously, with 30% saying they’ll
Bad use credit less. Savings will also continue to
be a struggle as only 19% say they will be
Not Sure 3% able to save more even when the economic
storm clears.

Page 2 © 2009 The Nielsen Company. All rights reserved

Consumer Sentiment

Lifestyle Changes—Use of Credit

Past 6 months When conditions improve in the future

8% Consolidate
Debt 5%
Debt 16%

Use Credit 35% Use Credit

Cards Less 33% Cards Less

Use Credit 13% 2008 Use Credit Will Continue to Do

Cards More 17% 2009 Cards More 2009

The middle still feeling the pressure What’s interesting is the comparable concern Adding to that middle-class worry are
In October 2008, concern about the economy in the middle and lower two brackets. In growing concerns about personal finance
was felt equally across the board, regardless fact, the middle bracket (those with a $100- matters at the heart of the American dream.
of household net worth. Now, however, 249K net worth) expressed the highest
the higher net worth households seem to amount of concern in 2008 and 2009,
be faring better with their extreme concern evidence that this is not a “poor man’s
almost cut in half. The two highest net recession.” If anything, those in the middle
worth brackets showed a noticeable drop are feeling the most pressure. These mid-net
in extreme concern compared to the lower worth households are likely comprised of
three brackets, perhaps because homeowners recent first time home buyers who traded up
with higher equity are less affected by at the peak of the market, or took equity out
recent drops in home values. of their homes to fund other lifestyle choices.

Percent of Extreme Level of Concern

Total 22%
Under $25k 23%
$25k-$99k 20%
$100k-$249k 24%
$250k-$499k 18%
$500k + 18%

2008 2009

Page 3 © 2009 The Nielsen Company. All rights reserved

Consumer Sentiment

Specific Concerns in Personal Financial Situation

Safety of Retirement Portfolio 47%

Performance of Stock Portfolio 41%
Safety of Savings Account 33%
Mortgage or Home Value 35%
Employment / Job Stability 34%
Stability of My Company 25% 2008 2009

More than one third of consumers continue Passion for precision

to be concerned about their mortgage or Nielsen is the preferred choice of Fortune
home value—not surprising given that recent 500 companies who wish to optimize their
data shows that one in eight mortgages is customer targeting, media strategies and
delinquent or in foreclosure—and the median site analysis decisions. Combining the most
sales price of existing home sales is down passionate team of industry experts with
16.8% over this time last year according to world-class data, software and services, we
an economic snapshot at the time the deliver solutions that help you identify
survey was fielded. But the greatest concerns both ‘who’ and ‘where’ your best customers
are around investments—specifically and prospects are—with precision.
retirement portfolios as total family wealth
has decreased since its peak in June 2007. Superior client service and support
So while there may be less panic about the Nielsen is recognized for its broad range of
economy in general, these personal factors superior client service offerings. We partner
underscore what we’re hearing: the recovery with you to deliver exceptional consultative
for the consumer will be a longer, and more client service and support that includes
personal road back. dedicated account teams, technical support,
training and industry and subject matter
experts in segmentation, demographics,
direct marketing, consumer research
and analytics.

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© 2009 The Nielsen Company. All rights reserved.