Consumers Spending More, Just Not on What They Want

Slightly less than half of all Americans (45%) report spending more than they did a year ago, while just 18% report spending less.

A closer look at these numbers reveals Americans’ increased spending is on household essentials, such as groceries, gasoline, utilities, and healthcare, rather than on discretionary purchases.

At the other end of the spectrum, approximately one-third of Americans report spending less on discretionary items such as travel (38%), dining out (38%), leisure activities (31%), consumer electronics (31%), and clothing (30%).

More than half of Americans say they are spending roughly the same for rent or mortgage, household goods, telephone, automobile expenses other than fuel, personal care products, and the Internet.

All of this suggests that the rising cost of essential items is further inhibiting family budgets that have already been hit hard by the Great Recession and are still reeling from a sluggish economy.

Summer travel plans of Americans clearly indicate the tension between increased spending on essentials and reduced spending on discretionary items.

While considerably more Americans said they are traveling this summer (69%) than said so in 2009 during the Great Recession (52%), over one-third of travelers plan to travel less (36%) than last year.  This is roughly comparable to Gallup’s findings in the summers of 2010 and 2011 (33% and 35%, respectively).

Furthermore, many travelers planned to stay close to home: More than two-thirds of those who traveled this summer intended to take a trip longer than an overnight trip.

Among those, most traveled by car (81%), whereas just less than half took at least one trip by air (47%).  Less than 10% intended to travel by bus or train this summer.

Slightly more than half expected both transportation and non-transport expenses for their summer trips to cost more this year than last.

These results paint a picture of consumers straining against rising prices on daily essentials to afford summer travel, dining out, and discretionary household purchases — the kinds of purchases that normally keep an economy humming.

And while the two-thirds of Americans who planned to travel this summer is the highest level Gallup has measure since 2006,  virtually one-third planned to spend just one night or less away from home, meaning it is not much of a vacation.

Those who did intend to travel expected to spend more in all travel categories — transportation, food, lodging, and entertainment — than last year, further pressuring their already-strained budgets.

Most said that they would take their own cars despite the relatively high gas prices.

If there was any doubt that the U.S. economy is still struggling to get back on its feet, the results of this poll bolster that reality.

Because consumer spending is the lifeblood of a healthy economy, these findings suggest that discretionary spending still has a ways to go before it will fuel the kind of economic growth Americans have been hoping for.

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