March 10, 2002
Scripps Howard News Service
by Mary Deibel

Six months after the Sept. 11 terrorist strikes, Americans are more intent than before on saving for a secure financial future.

"Those who speculated that terrorism would encourage Americans to spend more freely and save less were wrong: Sept. 11 and its aftermath have had a sobering effect on personal financial behavior," Stephen Brobeck, head of Consumer Federation of America, said Tuesday in releasing a new poll.

The survey of 1,000 adults, tied to Tuesday's launch of a nationwide America Saves campaign by the federation and Bank of America, found that:

- Thirty-three percent of respondents put more importance now than before Sept. 11 on personal savings; only 9 percent don't care to save more. Twenty-five percent say they're more focused on paying down debts while 11 percent are less interested. - Thirty-six percent are less concerned about their financial status now than a year ago, compared to 25 percent who worry more. Younger workers 25 to 34 are likely to be most sobered financially by Sept. 11 along with families making $35,000 or less.

- Thirty-six percent care less about luxury goods while 6 percent indulge more.

America Saves, begun with a pilot program in Cleveland last year, is launching other chapters along with an interactive Web site - www.AmericaSaves.org - to help people plan their finances, whether they want to buy a house, save for retirement or set up a rainy-day fund.

"The events of Sept. 11 caused Americans to reassess their priorities and take steps to shore up their balance sheets," said Lynn Reaser, chief economist for Banc of America Capital Management. "Individuals seem less willing to take financial risks and are adopting a more conservative approach to spending and living."

Reaser said a third of poll respondents admit to shaky finances, reflected in the record 1.45 million bankruptcy filings last year. However, she added the numbers bear out poll findings that most people are more financially secure:

- America's savings rate rose 2 percent last year while consumers cooled credit-card use in December, sending borrowing to its lowest level in 11 years, according to Federal Reserve reports.

- Sales of existing homes soared to new January highs after a record 2001. A home refinancing boom, which let people cash in on low interest rates and rising home values and consolidate debts, put close to $100 billion in consumers' pockets.

- Savers have $1.1 trillion invested in money market funds and $3.4 trillion in stock mutual funds. Enron's collapse may have made small investors skittish about the stock market, but they aren't pulling out: January was the fourth straight month that more money went into 401(k) plans and mutual funds than came out, the Investment Company Institute reports.

At the same time, the 80 percent of consumers who are not in the wealthy investor class are spending enough on homes, furniture and appliances to keep the economy going. Fed Chairman Alan Greenspan calls it "trickle-up economics."

"Moderate-income households have a much larger proportion of their assets in their homes, and the continuing rise in the value of houses has provided greater support for their net worth," the difference between what they owe and own, Greenspan says. In the bargain, he adds, they cushioned the economic slowdown.

Jane Pernicone, a wife, mother and child-care training coordinator, is doing her best to prove Greenspan's point: As one of 145 charter members of Cleveland Saves, she worked with a financial coach to develop a budget and has $50 a month deducted from her paycheck to buy new kitchen appliances for the family's 50-year-old home.

"We've already bought a new refrigerator, with an ice maker and the works," she says. "Just making little changes made a big difference. We set our priorities, and we're getting what we want."