Personal saving rates are at historic lows and rock-bottom interest rates have fueled debt burdens, causing some economic experts to worry about the state of personal finances for the average American household. Federal Reserve Board Governor Susan Schmidt Bies acknowledged in a recent speech that some "pockets of financial stress exist among households," but "the sector as a whole appears to be in good shape."
Americans don't necessarily disagree with that assessment, given their generally upbeat responses to questions about their personal finances from two April Gallup Polls.
Personal Finances
In an April 4-7 poll*, 52% of Americans reported their personal finances were excellent or good, and 48% said they were only fair or poor. Americans' opinions of their personal financial situations have remained relatively stable over the last five years. There have been few drastic changes in the proportion who describe their personal finances as excellent, good, fair, or poor. If climbing debt burdens have worsened finances in the last few years -- this is not reflected in the overall trend.
The majority of Americans are comfortable with their personal finances, according to an April 18-21 poll**. Fifty-seven percent claim they aren't worried about their family finances; that number has remained stable since the beginning of the year.
Gallup asked Americans in the April 4-7 poll whether they feel their financial situations are getting better or worse. About half of Americans express an optimistic view about their financial situations and a third believe things are getting worse, while 15% volunteered that things would remain the same. Americans have always been more positive than negative in their answers to this question.
Are American Families Stretched Too Thin?
Much of the world may see American consumers as hedonistic big spenders, but Gallup data reveal the majority of Americans believe they are living within their means. About 8 in 10 American consumers (81%) feel they aren't overextending themselves financially, despite the low average personal savings rate of 1%.
That number has held steady even as debt burdens have increased and the overall savings rate has decreased. Gallup received basically the same response when the question was asked in 1974, 1975, and 1984.
Income, Spending, Saving Expected to Hold Steady
Comfortable with their current financial status, most Americans do not see much change in store over the next six months. About half of consumers believe their incomes, their monthly savings, and their spending levels will remain the same, in line with what Gallup typically finds. No more than a quarter of Americans expect these things to decrease. A larger percentage of Americans, 39%, predict their personal debt burdens will come down, compared with 41% who expect no change in their debt levels and just 17% who expect to take on more debt.
*Results are based on telephone interviews with 1,010 national adults, aged 18 and older, conducted April 4-7, 2005. For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±3 percentage points.
**Results are based on telephone interviews with 1,003 national adults, aged 18 and older, conducted April 18-21, 2005. For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±3 percentage points.
