According to Mintz.com, Americans are continuing to tighten their belts through Q1 of this year. 2008 data shows users of the online personal finance service cutting spending by an average of 4% each quarter, and by another 4% in Q1 2009. Overall Q1 2009 spending was down 17% versus Q1 2008 across eight key categories. This indicates that, at a national level, the leading money management and budgeting service’s users remain concerned about the length and depth of the U.S. recession and its potential impact on family job loss and economic security.
This continuing trend of regular expense reductions tells me that consumer confidence is not yet on the rise,” said Aaron Patzer, CEO and founder of Mint.com. “Our users are looking for more concrete evidence that the U.S. economy is truly bottoming out before they’ll be returning to prior spending levels … if in fact they do. While it’s tough to know that 17% of last year’s spend has fallen out of the American economy, it’s satisfying to know that our financial management and budgeting software appears to be helping our growing user base weather one of the longest downturns in our nation’s history.”
The most dramatic decrease is in Shopping, where user spending has dropped by more than 40%, which is significant savings in aggregate, but was accomplished by a steady, gradual 3-5% cut each month in a discretionary category where that type of control is possible
Users have also cut spending quarter over quarter in Entertainment (by 24%) and Bills & Utilities (by 16%)
Other categories have fluctuated quarter over quarter based on seasonal shifts, but still show a net decline:
Spending on Gifts and Donations was down 1%, in spite of a 25% spike in Q3 and Q4 with election donations and the holiday season
Automotive spending has seen the broadest swing in spending, with the extreme variance in gas prices in the same time period, but still nets at a 24% decline over the examined quarters.
The only category that has completely recovered is Food & Dining, where spending in Q109 was actually higher than it was a year prior – but just by 2%.
“This data suggests that Mint’s current tools and guidance are working well for our users today,” said Patzer, “But there’s much more opportunity to make budgeting and planning easier and more effective for more Americans. We’ll be introducing new and improved product features and educational content in Q3 and Q4 designed to do just that.”
Economic Recovery Anytime Soon?
As unemployment continues to rise and disposable income drops, no one is anticipating a fast recovery. Consumers have become increasingly concerned for their jobs and are saving rather than spending.
According to market research firm IBISWorld and their latest report on the economic crisis, we can expect the economy to contract overall by 3% in 2009 – the worst decline in more than 50 years. The lowest point may have been reached in the first quarter, and it will not be until 2011 that overall economic activity will surpass 2008 levels.