The news has been filled with reports about foreclosures and bankruptcies due to subprime mortgages that were signed in previous years. Everyone knows this is affecting the housing market. What they fail to realize is the other effects it is having on other industries. With the crisis that is facing the housing industry there has been a trickle down affect to many other markets. The effect has been severe enough, that in general Americans are looking to spend less in the coming months. This could be bad news to retailers with the holiday shopping season just around the corner. This information was provided in a recent press release from TNS.
As the housing market suffers, many times it is a predictor of the overall financial spending of consumers in the country. The survey conducted by TNS indicates this assumption is likely to be correct once again. The survey was conducted from September 20th through the 23rd and included 2,500 adults in the United States over the age of 18 years old. The results are not encouraging for the upcoming holiday spending season.
Overall, one out of every three adults were planning on cutting back on spending in the coming months based on the subprime mortgage crisis. Areas that many people are considering cutting their spending the most in are home improvement and furnishings, travel and entertainment. Survey participants also indicated they are expecting to reduce their purchases in the technology sector of products.
Parents are planning on cutting back on luxuries but still support the education of their children. Over one out of five parents expect to cut their spending in home improvements (23 percent) and travel (21 percent). Parents will not be cutting on the savings they are putting away for their children’s education. Only 2 percent of the survey participants said they would reduce the amount of money they would spend on their children’s education.
So, what are the survey participants blaming for this need for a reduction in spending. The large majority feel the economy has been hurt by the subprime mortgage lenders, and feel that those organizations have creasted this crisis. 70 percent of the survey participants felt that way. Meanwhile sixty percent of the participants also names the real estate and housing industry as a whole as responsible. Survey participants also thought the subprime borrowers and investors had large roles to play in this situation as 58 percent laid the blame on the borrowers and 57 percent on the investors.
Overall 76 percent of the survey participants felt this subprime mortgate crisis was as sever as the dot-com issues and how they affected the market at the end of the last century. If this is true, then it is becoming clear that the upcoming holiday spending season will see Americans being much tighter with their budgeting and their hard earned money.
Prnewswire.com. “New Study From TNS Reports One-Third of Adult Americans Plan to Cut Back Spending Due to Subprime Mortgage Crisis”.
URL: http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109 STORY;=/www/story/10-15-2007/0004681884 EDATE;=