Of economic recovery, consumer spending cuts and pay raises

As a nation, our expectations for near-term economic recovery are low, we’ve cut back on spending, and only about 77% of us will get a raise in 2009.

That’s that the summary of a jumble of recently released surveys attempting to explain what American consumers and business owners and doing and thinking financially.

HARRIS POLL
The closely watched Harris Poll, released Tuesday (Feb. 3), said expectations for the economy and jobs fell in January to the lowest point ever. Survey results show that Southerners are less pessimistic than other regions of the country. The Harris Poll was conducted online within the U.S. between Jan. 12 and Jan. 19,, among 2,848 adults aged 18 and up.

Other Harris Poll results include:

• While most people (72%) rated economic conditions in their region as bad, only 32% expected that their households’ financial situation would get worse in the next six months.

• When asked about their feelings on the economy in their region in the next six months, a 53% majority said they were pessimistic and 23% said they were optimistic.

• 57% of Southerners, compared to 63% of people in the West and 60% in the Midwest, said their households’ financial situation had become worse.

• 50% of Southerners, compared to 54% to 57% in other regions, said they were pessimistic about the economy over the next six months.

CUTTING DEBT
Also released Feb. 3 was report from Fort Worth, Texas-based First Command suggesting that consumers intend to save more and cut debt in 2009.

Key results from the First Command survey are:
• Americans expressed concerns about the state of the economy (67 percent), the stock market (44 percent) and job security (32 percent), the latter nearly doubling from a low of 18 percent in May.

• Households cut back on expenditures in 2008 in a variety of areas including reductions in holiday spending (56 percent), leisure activities (54 percent), utility bills (52 percent), clothing purchases (48 percent) and household good spending (38 percent).

• Americans are becoming smarter in the ways that they do spend their money. Forty-nine percent said they shop at discount stores, 44 percent use more coupons and 37 percent buy generic instead of brand name items. And when they make purchases, 38 percent are using cash or debit cards instead of credit cards.

• “With half of respondents saying they are worse off than they were a year ago, we may be seeing more than temporary changes in consumer behavior,” noted a statement from First Command.

PAY RAISES
A WorldatWork survey released Feb. 3 suggests that 77% of the workforce can expect to receive base pay raises in 2009. Major metro areas with the largest projected salary budget increases of 3.1 percent are Philadelphia, Pittsburgh, San Francisco and Washington, D.C.

The data for the WorldatWork Special Update was taken and compiled in early December, after the credit markets tightened and after the presidential election so that companies had as many of the variables needed to re-assess compensation plans for 2009.

“There is a silver lining in this dark economic cloud,” said Anne C. Ruddy, president of WorldatWork, a global human resources association. “Employers are committed to rewarding employees; our data shows 77 percent of employees can expect a pay raise, especially high performers.”

Other details of the report include:

• Across all employee categories, industries and regions, survey participants reported lower 2009 salary budget increase projections by 0.8 percent since April, taking the overall average from 3.9 to 3.1 percent nationwide.

• Half of participating organizations (51 percent) made changes to their 2009 projected salary budget increases, with more than 90 percent of those making changes lowering their salary increase budgets by an average of 1.6 percent.

• For exempt salaried employees, 10 percent of participating organizations will be freezing pay in 2009.

• For organizations reducing salary budget increases, 19 to 33 percent are cutting salary increase budgets to zero.

• 51 percent of all respondents characterized their organization’s 2008 year-to-date (YTD) financial performance as worse than 2007 with only a quarter saying their organization was performing better than the year before.

• More than half of the organizations minimizing their 2009 salary increase budgets cited a recent and/or anticipated decline in business as the reason for change.