Americans Still Aren’t Jumping For Joy Over Economic Growth
Bankrate’s May 2013 Financial Security Index revealed Americans to be optimistic, but cautious, about the economy, which was reflected in a decision not to increase spending elsewhere in the face of falling gas prices.
American consumers are more optimistic about their overall financial security than they were a year ago, but still did not spend money saved at the pump on vacations or dining out. The Financial Security Index measures feelings about financial security, with 100 being a positive feeling and below 100 a negative one. The index was at 100.2 for the month of May, the first time there has been a positive reading for more than three months since the index was created. The index in the past months has reflected consumers’ caution, as May’s reading was down slightly from those of March and April, and there has not been an increase in discretionary spending.
While gas prices typically increase during the summer months, this year there has been a drop in price. This drop only caused 17 percent of consumers to increase spending, while 80 percent responded that they chose not to spend more despite lower gas prices. The drop in gas pricse only saved consumers about $13.50 per month, which they felt was hardly enough to warrant extra spending. Americans are driving less overall to save money, with demand for gasoline lower this May than it has been since May 1999.
Despite the optimistic rating, a third of consumers still feel less confident about their savings than they did last year, and the savings rate dropped to levels comparable to the beginning of the recession. More optimism was seen regarding job security, net worth, and comfort with debt, and Americans felt that they were more comfortable with their overall financial situations than they were last year. Signs of an improving economy can also be seen as housing and home sales continue to rise, interest rates remain low, and Standard & Poor’s 500 index and the Dow Jones industrial average both reached record highs in the last month.
American consumers seem to be exhibiting more caution about the economy than has been seen in the past, and are reluctant to spend more on non-essential items even if they are saving elsewhere, as the economy makes a shaky recovery.