1st Quarter Report on New Jersey Consumer Views
Worried About Their Jobs, Consumers Shore Up Savings
According to the quarterly consumer survey by Fairleigh Dickinson University’s Silberman College of Business, 14% of New Jerseyans are very worried that they might lose their jobs in the next 12 months, an increase of 4 percentage points from the January survey. Only 36% say they are “not at all worried” about losing their jobs, down from 43% just three months earlier. Their worries are justified by their experience with friends and family: 61% now report they have a relative or close friend who has been laid off, compared to 54% who said so in January.
In addition, 14% of New Jerseyans report that paying their credit card balances is “very difficult,” the highest percentage since the survey begun in 2003 and a sharp increase from the 8% reported in January.
“Consumers are right to be worried,” said Sorin Tuluca, professor of finance at the Silberman College of Business and a specialist in financial crises. “The efforts of the Fed, Treasury, Congress and the Obama administration will have little immediate effect on most companies. Consumers can expect more job losses as the economy continues to contract. ”
Faced with prospects of job loss and increased financial difficulty, half of those who are working now (49%) say that if they lose their job tomorrow, they can live for less than six months on savings, while 47% estimate that they can live off their savings for more than six months. As might be expected, those workers 60 years and older have the most savings, as 69% indicate that they can live off their savings for six months or more. Only 34% of those aged 18-29 can do the same. The encouraging news is that only 5% indicated that they have no savings, compared to 10% in January.
“The consumer used to save very little, if any, and live on credit,” said Tuluca. “At the end of the day, consumers’ precautionary saving pattern, while understandable, is counterproductive for the revival of the economy — in fact, it might feed a downward spiral. The hope is that government spending will make up for reduced consumer spending,” added Tuluca.
On the brighter side, New Jersey consumers remain optimistic about the future: 44% think that things are going to be better a year from now: 28% say things will be worse, and 28% say things will be the same or they’re unsure. However, 60% say they’re financially worse off than they were 12 months ago.
The telephone survey of 838 randomly selected adults throughout New Jersey who participate in their households’ financial decisions was sponsored by Fairleigh Dickinson University’s Silberman College of Business and conducted by Fairleigh Dickinson’s PublicMind from March 30 through April 6. The survey has a margin of error of +/- 3.5% percentage points.
Sorin A. Tuluca 973.443.8810 Peter Woolley 973.670.3239
For more information, please call (973) 443-8661.