Americans Don’t Expect Economic Bailout to Improve Their Finances

RISMEDIA, Nov. 3, 2008-As the government begins rolling out the $700 billion economic bailout package, nearly two-thirds of American families do not expect the far-reaching plan will improve their personal finances, according to the First Command Financial Behaviors Index.

Results of the Index’s October survey indicate that 63% of American families do not feel confident that the government rescue plan will have a positive effect on their personal financial situation. And one-third (32%) think that it will be at least two years before their household’s financial situation stabilizes.

“The majority of Americans do not believe the $700 billion plan will bail them out of their personal economic crisis,” said Scott Spiker, CEO of First Command.

“They don’t expect a rapid turnaround, and they are beginning to manage their finances accordingly. In fact, our third quarter Index findings reveal that consumers are already taking matters into their own hands. They are buttoning-down for the downturn by saving more and cutting debt. Short-term savings for the typical family totaled $901 in September, up 29% from $696 in June.”

Financial confidence is considerably higher among those who are planning for the future. Consumers with a financial plan consistently register a higher Index score than respondents without a financial plan, and the point spread has been steadily widening (eight points in June versus 17 points in September). The Index among those with a financial plan actually increased four points to 97 in the third quarter while the Index score among those without a financial plan decreased five points to 80.

“Our research also consistently shows that consumers who have a financial plan through a relationship with a trusted advisor are more likely to stay the course during times of market volatility than those without a plan,” Spiker said. “The average American family may be more likely to receive a jolt of confidence from a personal financial plan than the government’s rescue plan.”

Regarding the U.S. economy, only half of Americans believe that the government plan will help to stabilize the national situation. Nearly two-thirds (64%) of Americans think that it will be at least two years before the economy is stable again.

The October survey also reveals that women are not as confident as men regarding the potential of the bailout plan to improve their personal finances. Seventy percent of women are not confident that the plan will have a positive impact on their personal financial situation, while only 54% of men reported the same sentiment. However, men and women report relatively similar thoughts on the length of time it will be before their household’s financial situation is stable. Thirty-five percent of women and 30% of men think it will be at least two years before their situation stabilizes.

“Americans are realizing that a long-term view is necessary,” Spiker said. “They don’t expect the $700 billion plan will lead to a recovery anytime soon.”

Compiled by Sentient Decision Science, LLC, the First Command Financial Behaviors Index assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 1,000 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 3.1% with a 95% level of confidence.

For more information, visit http://www.firstcommand.com/.