According to a recent Gallup poll, Americans spent an average of $69/day in stores, restaurants, and gas stations as well as online. For Americans making less than $90k/year that figure was $61/day. In 2008, during the height of the recession, Americans spent on average $124/day. For individuals making less than $90k/year that figure was $104/day. These figures do not include what Americans spent on housing, groceries or transportation costs. Creditcards.com reported that the average credit card debt is $14,743. While the average interest rate is somewhere around 13%, there are some sub-prime credit cards that charge as much as 79%.
Why the dramatic decrease in spending? Experts blame flat consumer spending on lack of consumer confidence, high employment, underemployment, and high gas prices. In addition, the Japanese crisis had an effect on global supply chains thereby reducing manufacturing, i.e. jobs.
While I am sure some of the decrease was due to the global economic crisis there is a great deal of evidence to suggest that people were spending beyond their means and incurring huge amounts of debt. If your income suddenly decreases because of unemployment or underemployment, you need to look for ways to reduce expenses or obtain more income. As a result there has been a huge movement towards living more frugally, paying off debt and reducing consumption. People from all walks of life, even Hollywood stars, have been effect so it makes sense that lifestyle changes will occur.
Unfortunately there's a catch. Since people are spending less, fewer jobs are being created thereby hurting the already fragile economy. Consumers, even the ones with money, don't feel secure in spending especially with high foreclosure rates and governments shutting down. So what is the answer? How do we stimulate the economy and create more jobs?