Economy forces consumers to redefine luxury, study says
Items once considered necessities aren't anymore in face of recession
In the midst of a recession, Americans are rethinking the need for items they once saw as necessities, according to a new report from the Pew Research Center.
The survey of more than 1,000 Americans, conducted by telephone in early April and released on April 23, shows that consumers are redefining luxury goods. This comes as job fears and general economic instability are driving down spending on credit cards, a common payment method for many of the items discussed in the survey.
In a 2006 Pew survey, most American consumers listed items such as cars, TVs or microwaves as essential, but the numbers have dropped off significantly as the market has worsened. Forty-seven percent of respondents said they see a microwave as a necessity, down from 68 percent in 2006, while 52 percent now see TV as a necessity, down from 64 percent in 2006. The car dropped slightly in the necessity list, with 88 percent of Americans seeing it as indispensable, compared to 91 percent in 2006.
"Societal conditions have changed," says James Burroughs, associate professor of commerce at the University of Virginia. "In many ways, luxuries are things that are learned in response to a changing environment."
Those changes have not been for the better. Today, Moody's announced that credit card charge-offs -- which occur when lenders conclude they are unable to collect a debt and choose to remove it from their financial accounts -- hit a record high of 9.30 percent in March. Also, the Federal Reserve's latest report on consumer credit showed a nearly 10 percent drop in consumer credit card use.
The survey supported that data. It revealed that more than 80 percent of Americans say they've cut back on expenses, while 20 percent say they're doing more work in and around their homes.
- How to help the homeless with your credit card – How can you help the homeless with your credit card? Hungry people need to eat, so offer to pay for a meal. Or set up a recurring charge to a nonprofit serving meals or providing medical care for the homeless ...
- Credit card issuers - contact information – Toll-free customer service numbers for the major credit card issuers and banks. Log in to pay bills online and check your account balance ...
- Guide to LGBT finances: You can live a richer life – This guide to personal finance for LGBT Americans covers five key areas – retirement, insurance, marriage, children and credit card debt ...