The Surprising Relience of the U.S. Consumer, 2012 EditionPrasad Iyer |
U.S. consumers have become acclimatized to the new normal. They’re spending, though they’re spending less. They’re saving, and depending on their circumstances they’re either saving absolutely, or indirectly by paying down debt.
That’s the message of this year’s version of Global Insights’ annual look at the credit/debit dynamic (this year very much add prepaid to that dynamic).
In 2008, in order to meet the challenge of the crisis, consumers made a commitment to spend less and pay down debt. Spending less manifested itself in several ways: Cutting back on discretionary outlay, trading down to cheaper options, decreasing interest expenses, and weighing every buying decision.
Not surprisingly, their efforts resulted in significantly lower debt levels and an increase in savings, which in 2010 also boosted consumer confidence. In 2011, debt continued to decrease and savings continued to increase—but not as dramatically as in 2010.
While 2009 was the year of cutting back and 2010 was the year of spending on necessities (with some affluent consumers increasing discretionary spending), 2011 was the year of financial optimization, or smarter spending and saving. Consumers did not cut spending or pay down debt as they did in 2009 and 2010. Rather, in 2011, consumers optimized spending and saving, and they used credit cards, debit cards and prepaid cards to help them do it.