Consumers Spending to Feel Better
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Americans just don't seem to learn their lesson.
Despite stagnant wages, escalating costs and a bleak economic outlook, more than half have splurged on a discretionary item in the last month, according to a survey by HSBC Direct (HBC). Many put emotion over logic, with 47% saying they spent the extra cash because "it just feels good."
HSBC Direct's survey found that one in five Americans say saving 10% of their income is harder than quitting smoking, losing 15 pounds or working out regularly. No wonder the U.S. savings rate has plummeted to just four-tenths of a percent of disposable income from 4.7% a decade ago and 7.2% two decades ago.
"These findings show us how emotional some personal finance decisions can be," says Kevin Martin, an executive vice president at HSBC. "It's clear from the survey that Americans have good intentions to save more, but at the end of the day, many are still treating themselves and others."
About 42% of respondents splurged on themselves in the last month, while 51% splurged on others. Top guilty pleasures were a weekend away or a less costly trip to the movies. The findings seem to contradict benchmark surveys, which put consumer confidence at an all-time low, though spending doesn't necessarily correlate with how shoppers view the economy.
While socking away discretionary funds is wiser than going on a spur-of-the-moment trip to the Bahamas, it's tough for consumers to figure out the best place to store their cash. Savings rates have declined to levels below inflation -- which surged to 5% in June due to rising oil and food prices. Stock investments have provided weaker gains -- if any -- as the market gyrated into bear territory.
