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According to a recent report from TNS Marketing Research:
The report shows that many consumers, particularly in the UK, US, Germany and Mexico, currently lack the resources to meet an unexpected financial crisis like sudden car or home repairs or minor health related expenditures....
"...According to Peter Tufano of Harvard Business School, "These figures include more than just the unemployed or lowest income households. In many countries, there is widespread financial fragility with a significant number of seemingly middle-class consumers extremely vulnerable to sudden financial emergencies."
The report goes on to state that nearly half of the survey participants from the US, Germany and Great Britain would not be able to come up with $2,000.00 in a crisis, even if they tried borrowing from friends or family. More than half of the respondents from Mexico felt they would be unable to come up with the cash."
It appears, however, that we are on the right track. According to The Department of Commerce, Americans increased their rate of savings from 2.8 percent in August of this year to 3.3 percent in September. That's a marked improvement since June of 2005 when the Bureau of Commerce reported that the savings rate for U.S. households had fallen to zero.
At the time, the marketing pressure to spend and buy was white hot, and it seemed that everyone had made a windfall in Real Estate. Even the idea of equity in a home made people feel like they had access to plenty of money if they needed it. The depression culture of saving and spending only what you made had, all but disappeared from the common psyche. People were living paycheck to paycheck and using credit cards to fund what they couldn't afford.
Fast forward to 2009 and it seems that consumers have learned their lesson. Consumer spending is down and in spite of stimulous packages creating a short term illusion that they will return to the spending habits of the recent past, that seems unlikely in the wake of high unemployment and lowered credit rates, perhaps the change in the American Consumer will be permanent.
What have you saved for a rainy day?
