California consumers still holding back
Many Californians have permanently altered their saving and spending behavior and are feeling better about the economy’s prospects, according to a survey by Citibank California.
A total of 60% of those responding to Citibank’s quarterly survey said they had cut back on credit card purchases, discretionary spending and holiday travel plans, the bank said Tuesday.
The top two ways Californians have curbed spending are to splurge less in restaurants (71%) and on clothes (69%). Survey respondents said they were also going to the movies less, buying fewer name-brand items and deferring home improvements.
Consumers have shown reluctance to cut back on cellphone and Internet use, said Rebecca Macieira-Kaufmann, president of Citibank California.
“People seem to be prioritizing social networking over spending money on food or clothes,” Macieira-Kaufmann said.
The survey, taken from a random sample of 1,206 respondents, found that 63% of consumers were reducing credit card purchases, 55% were working to lower debt, and 54% were postponing a major purchase.
Only 4% plan to travel more during the holidays this year, while 30% will travel less and 43% have plans similar to last year.
The survey’s “optimism index” detected a slight bump in perceptions about economic conditions.
The index improved to zero in the third quarter from minus 3 in the second quarter (on a scale of minus 100 to 100), even though most of those surveyed rated current economic conditions negatively. The minimal increase boosted the index out of negative territory for the first time since Citibank began the surveys in the third quarter of 2009.
“It doesn’t just show optimism from consumers about the future; it’s also about respondents’ current situation,” Citibank spokesman Robert Julavits said. “They’re saying that even though it’s tough out there right now, they feel good about the changes that they’ve made and they have a lot more control of their spending, saving and borrowing.”