Special Reports

Consumers watch pennies, saving more



Local financial planners are seeing some of their clients saving more and shifting to conservative investments to protect the money they have.

With hundreds of thousands of jobs being lost every quarter, more people are choosing to forego luxuries they had indulged in during the past and are starting to save their money instead, data shows.

The personal saving rate as a percentage of disposable income more than doubled in December from the 12-month average of 1.7 percent to 3.6 percent, according to the Bureau of Economic Analysis of the U.S. Department of Commerce.

U.S. household debt declined for the first time in the third quarter of last year since 1952, when the Federal Reserve began tracking it, according to the Wall Street Journal. Additionally in that quarter, consumer spending fell for the first time in 17 years, the Journal reported.

“We’re definitely seeing a shift in the investment philosophy going more conservative — CDs and treasuries,” said Darrell Hannaseck, branch manager and financial adviser with Ameriprise in Bradenton. “We’re definitely getting some people who are rebalancing their portfolios and accounts.”

Some of Hanneseck’s clients are “merely sitting tight” and hoping to weather the current economic storm, he said.

But local financial advisers say it’s largely a mixed bag as to what their clients are doing with the money they no longer seem to be spending.

Dan Chappie of Peninsula Asset Management in Bradenton, can’t say for sure whether his mostly older clients are taking fewer cruises or holding off on buying Rachel Ray cookware sets but they are becoming more conservative when it comes to their savings.

“I’ve seen a shift overall in people’s desire to take risk in a portfolio,” Chappie said. “I think clearly the evidence bears out that cash balances in money market funds have increased dramatically over the past year. But in terms of how that affects their spending habit, that’s not something I can really answer for you.”

Joe Rogers, general manager of the Sandbar Restaurant on Anna Maria Island, said he’s not seeing any drastic reduction in spending by customers.

“Customers are still spending what they were spending before,” he said. “If anything, waiters feel they may be tipping less, I hate to say. Maybe they’re trying to save money there. Even if people are watching their money … they’re not eating lighter, they’re not splitting meals. They’re enjoying their time.”

Nick Zec, vice president of financial services and benefits for Boyd Insurance & Investment Services Inc. in Bradenton, said many of his clients are still staying the course with stocks and other investments in light of the 40 percent or more drop in the major indexes over the last year and a half.

Although he advises his clients to remain committed to their investments and believes the nation as a whole will get through the current crisis, Zec acknowledges some people simply can’t.

That’s because they are out of work and have to think about the here and now, rather than the future.

“We’ve seen some people who have just stopped because they lost a job or their spouse lost a job,” Zec said. “It’s more of a matter for them of, you put food on the table or save for retirement.”