A recent poll by BankRate.com shows that nearly two-thirds of Americans report that they are pulling back on spending. Given that approximately 70% of US economic growth is personal consumption spending, this may be an indication of slow economic growth in the future.
The majority of Americans who report that they are reducing spending cite a need to save more. Meanwhile, one-quarter, which was largely comprised of retirees, stated that stagnant income was the primary reason that they are cutting back on spending. The next most common reason was the need to reduce debt. A number of study participants also referenced uncertainty about the future of the economy as a reason to spend less and save more.
Given the rebound in consumer debt since the Great Recession, it is no surprise that Americans are now feeling a need to reduce spending in an attempt to improve their overall financial situation. However, this may also be a sign that the current low interest rate policy has run its cycle as consumers are no longer incentivized to make future purchases now due to the low cost of financing purchases. This could be a sign that the consumer spending cycle is slowing or even reversing.