Consumer spending’s taken a dive in the Great Recession. No jobs means no buying beyond essentials. We’ve heard that for months from Minnesotans in MPR’s Public Insight Network.
Things seem a little better lately, though. Minnesota’s jobless rate is holding its own at 6.8 percent and hopefully will drop a bit more when new data arrive next week.
So is that changing the outlook on spending and savings? Not really.
The responses we got back tell us many people are still snake-bit when it comes to spending. Many of us still aren’t feeling a recovery and those who are aren’t ready to write big checks yet for anything that isn’t absolutely necessary.
“I am not in a position to save anything,” said Betsey Porter of Bloomington. “I have to pay for my (car registration) tabs which went from $35/yr to $219/yr with the purchase of a new used car last year. YIKES!”
Check out the map below to read some of what we heard. The colors indicate how folks summed up their current outlook in mid-August. We got one bleak and one bright. “Holding steady” and “looking better” held the day but enough “worrisome” responses for us to know that the recession is still weighing on our friends and neighbors.
Tell us about your household here and we’ll add your responses to the map.
James Allen of Alexandria was among several parents who told us college bills would make it tough to save more this fall.
“I expect my financial situation to worsen,” he told us. “I will have two children in college and I will also be going back to school, which means less earning power on my part.”
One result: “We are putting off home improvements, especially carpet, shingles and replacing the deck. We have really cut back on non-essential purchases, have been for the better part of a year.”
Tom Jorgens of Crookston was among the most optimistic of Minnesotans who shared a story with us.
“I see growing signs of a recovery. Business is increasing again,” he wrote. He saw himself able to increase his savings and investments.
National data show the personal savings rate of Americans continues to climb.
Here’s a chart by the Federal Reserve Bank of St. Louis showing personal saving as a percentage of disposable personal income since 1970 (click on the chart for a larger view).
You can see savings took a dive in the 2000s but has been rebounding out of the recession.
The personal savings rate dipped to 5.9 percent in July, compared with 6.2 percent in June.
Still, it’s light years better than the 1.9 percent recorded in November 2007 — a month before the recession officially hit.
Here’s another St. Louis Fed chart showing household debt payments as a percentage of disposable income. That debt burden continues to plummet. (Click on the chart for a larger view.)
We’re hoping that when Minnesota’s August jobless data is released next Thursday it shows unemployment falling. Recent news of a jump in job vacancies here is also a positive sign.
Even as a jobs recovery starts to reach more people, though, don’t expect our love of leverage to return.
“At this point I’m just trying to pay down some debt and get a little ahead. Anything beyond that is being put off,” said Paul Shryer of Eveleth, who said he was holding steady in August and expected about the same this month.
“I will save a bit more,” he added, “mostly because I will (be) a bit closer to the surface.”
What’s your household economic outlook? Post below or drop us a line directly.