NEW YORK (MainStreet) The holidays are looming, but almost 72% of Americans are holding back on spending, according to a new report.
"70% of the economy relies on consumer spending, so when this many consumers are cutting back, it's going to be hard for the economy to get out of first gear," says Greg McBride, a CFA and senior financial analyst with Bankrate.com.
The Bankrate study found that 32% cited stagnant income as the reason for cutting back on spending, 20% worry about the economy and 27% say they are not holding back on spending at all.
"With hundreds of thousands of government employees furloughed and many government contractors reeling from the shutdown, feelings of job security plummeted to the lowest level in nearly two years," McBride said.
While 24% cited saving more as a reason to hold back on spending, compounding isn't what it used to be with the national averages for CD rates frozen across all durations since late 2008 when the Federal Reserve began to keep the short-term federal funds rate at a range of zero to 0.25%, according to RateWatch, a premier banking data and analytics service owned by TheStreet.
According to SaveUp.com, the top five things people are saving for include a new car, a gift for someone, a vacation, a computer and a phone.
"Many are still struggling with lower real wages and debt, so feeling cautious on spending this holiday season is an appropriate reaction," said Priya Haji, SaveUp CEO a free reward website for saving money and paying off debt.