Economic growth is shaped heavily by perception; there’s an old chestnut that says recessions wouldn’t be so bad, if people just refused to participate in them. The past few years have seen a number of obvious – not to say clumsy – efforts to kick-start economic growth by changing what people think about the economy. Some of this has been rather comical, such as President Obama and his allies perpetually claiming the economy is “poised for growth” and “Recovery Summer” is upon us. It’s not merely political spin – it’s an effort to manipulate the virtual economy, made by people who believe that the real economy is powerfully shaped by what the American people think of it.
It’s grim news for these opinion-shapers to learn from a new Gallup poll that people are much more interested in saving money than spending it:
The majority of Americans continue to enjoy saving money more than spending it, by 62% to 34%. The 2014 saving-spending gap is the one of the widest since Gallup began tracking Americans’ preferences in 2001.
It may be surprising that the gap between self-reported enjoyment of saving and enjoyment is as wide as it is in 2014, considering the recent signs of positive momentum in the U.S. economy. Prior to the Great Recession, the saving-spending enjoyment gap was much smaller than it is now. After the onset of the economic downturn, the divergence widened considerably over the next couple of years, including 2010, when the gap stretched as wide as 27 percentage points. But then there was a short-lived narrowing of the gap to 19 points in 2012 before it increased again in 2013 and 2014.
While this question does not measure actual spending or saving, it provides important insight into the psychology of the American consumer’s approach to money. At this point, the trend suggests that Americans have shifted their mindset significantly more toward the view that saving is the more enjoyable behavior, not spending.
Such frugality may be good individual advice, but it’s not good news for an economy that desperately needs consumer spending and investment to crawl beyond the weak economic growth of the past few years. As Gallup mentions, this poll is a measure more of attitude or “psychology” than what people are actually doing with their money; it’s not good that they have such a strong inclination to sit on it, rather than either spending it on job-creating economic activity or risking it as investment capital.
Also, Gallup goes on to observe that lower-income people are three times as likely to favor saving over spending. It’s a core principle of Obamanomics that showering the Little People with free money is the most powerful formula for economic stimulus, a belief that led to hilariously stupid claims by Democrat bigwigs that unemployment checks are a potent tool for job creation. That obviously hasn’t worked in practice. Gallup tells us it doesn’t work in theory, either, because when lower-income people get some money, they (quite sensibly) lean toward saving it or paying down debt, rather than spending it on the sort of consumer activity that would create “trickle-up” prosperity.