The ranks of Americans who contend they have permanently reduced spending is continuing to rise, pointing toward a more frugal consumer environment after the recession is over.

The May survey of the First Command Financial Behaviors Index reveals that 20 percent of Americans say they have cut back for good on spending, up six points from 14 percent in February.

 

“This steadily growing trend toward permanent belt tightening is not about getting through the current recession – it’s about the birth of a new way of life,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Americans are discovering a financially healthy lifestyle that doesn’t revolve around consumer spending and the accumulation of goods. They are embracing frugality as a desirable and permanent strategy. In this new frugality, consumers are cutting spending and saving more not just because they have to but because it makes them feel better.”

 

That’s an important consideration for many Americans who report that the recession remains a major source of anxiety. Half of the U.S. population has experienced at least one mental or physical health issue as a result of the economy, with 30 percent of survey respondents indicating that they have experienced a general increase in stress and 25 percent having experienced an increased feeling of anxiety. Many Americans indicate that they are experiencing sleep issues due to the economic situation, namely difficulty falling asleep (19 percent) and difficulty staying asleep (17 percent).

 

In response, Americans are embracing a variety of frugal financial behaviors. They are reducing leisure activities (52 percent) and clothing purchases (49 percent). Consumers are attempting to reduce their utility bills, including electric (38 percent), cable (30 percent), telephone (32 percent) and Internet (19 percent). And many Americans say they are shopping smarter, including shopping at discount stores (49 percent) and increasing their use of coupons (46 percent).

 

“These are the kinds of consumer behaviors that will form the foundation of a post-recession economy that is strong enough to address the long-term problems we face,” Spiker said. “As difficult as it is to say, this recession is a walk in the park compared to the looming Medicare and Social Security deficits. We’re not going to spend our way out of these problems. Government can’t make them go away, either. Americans must spend less and save more so we can take care of ourselves over the long term.”