Rising Home Heating Prices Will Put a Chill in Holiday Spending, According to Principal Financial Well-Being Index
Dec. 14, 2005 (Des Moines, Iowa) — Americans are expressing concerns about the expected high costs of home heating and natural gas this winter, with close to half (44%) saying that they will be spending less this holiday season due to higher energy prices. Energy price increases will also cause a majority (51%) to lower the thermostat this winter, according to the latest Principal Financial Well-Being IndexSM. The Index surveys U.S. employees at small and medium sized businesses (firms with 10-1,000 employees) and is released quarterly by the Principal Financial Group® and conducted by Harris Interactive®.
The Index also revealed that the summer's wave of natural disasters (Hurricanes Katrina, Rita, Wilma; Pakistan earthquake) did not change workers' financial behavior, aside from adding to the concern about rising energy prices. An overwhelming majority (85%) in fact said that the recent series of natural disasters didn't change their financial behavior at all.
"While last fall's hurricanes were a life-changing event for many living on the coasts, for the majority of American workers, the disasters and the upheaval they caused are a short-term financial challenge in the form of increased costs for home heating oil and natural gas," said Dan Houston, senior vice president, Retirement and Investor Services, the Principal Financial Group. "But we're encouraged that people are maintaining their commitment to their long-term retirement savings, and are not decreasing their 401(k) deferrals to pay for higher home heating costs."
Pulling In the Reigns on Spending and Heating the Home
Employees are registering concern about the steep costs expected this winter for home heating oil and natural gas, to the point that close to half (44%) will spend less this holiday season because of higher energy prices. In terms of spending by regions, just under half of respondents in the South (49%) will be spending less this holiday in contrast to the West, where only 38 percent of workers will spend less this holiday season.
More than half of respondents (51%) said they were planning to lower their thermostat this winter. Midwesterners are anticipating steep home heating costs with over half (58%) planning to turn down their thermostat, in comparison to the residents of the West (53%), East (45%), and South (48%).
Full Speed Ahead on Retirement Savings
Despite some short-term financial pain from higher home heating costs, workers' long-term savings remain largely unaffected. The vast majority (89%) indicated they have no plans to reduce their savings (e.g. 401(k) contributions) as a result of increases in energy prices. Easterners indicated the most confidence, with 91% saying they did not have to reduce their 401(k) contribution as a result of higher energy prices, followed by people in the Midwest and West at 89 percent and South at 88 percent.
Weathering the Storms
Despite the hurricanes' devastation in the South and Gulf Coast, workers in those areas are not altering their property and casualty insurance coverage, nor did they set aside large amounts of money in a "rainy day" fund. Only 9 percent of Southerners (and 8% of all respondents) said that the hurricanes prompted them to add or review their property and casualty insurance. Only 8 percent of Southerners (and 7% of all respondents) said they have established a "rainy day" fund for their family in the event of future natural disasters, and just 4 percent of respondents in the South (2% overall) said they have looked into moving to a location that is less vulnerable to natural disasters.
Job Security: Priority #1
The tumultuous year filled with hurricanes and news of massive layoffs in the airline and auto industries have made people feel more vulnerable about their jobs. The Index shows that, in terms of importance, employees continue to rank job security (52%) ahead of long-term financial future (36%) and challenging work (12%). Job security has risen significantly since last year, when only 47 percent of respondents said it was the most important item.
Methodology: The Principal Financial Group, the nation's 401(k) leader, commissioned Harris Interactive® to conduct an online study of 1,213 full- and part-time employees (ages 18+) of small and mid-sized U.S. businesses (firm size 10 - 1,000) between November 7-17, 2005, about their attitudes and perceptions regarding their financial well being and their current employee benefits. Data were weighted to be representative of the entire population of adult employees working for small to mid-sized U.S. businesses on the basis of age by gender, education, race/ethnicity, region income and propensity to be online. In theory, with a probability sample of this size, one can say with 95% certainty that the results have a sampling error of plus or minus 3 percentage points for the overall sample. Sampling error for the various sub-samples is higher and varies. This online sample was not a probability sample. This is one in a series of quarterly studies to identify and track changes in the workplace of small and mid-sized (growing) businesses. The first Principal Financial Well-Being IndexSM survey was conducted in the United States in 2000.
About The Principal Financial Group
The Principal Financial Group®
(The Principal®)1
is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $188.4 billion in assets under management2 and serves some 15.3 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
About Harris Interactive
Harris Interactive Inc. (www.harrisinteractive.com), the 13th largest market research firm in the world, is a Rochester, NY-based global research company that blends premier strategic consulting with innovative and efficient methods of investigation, analysis and application. Known for The Harris Poll® and for pioneering Internet-based research methods, Harris Interactive conducts proprietary and public research to help its clients achieve clear, material and enduring results.
Harris Interactive combines its intellectual capital, databases and technology to advance market leadership through its U.S. offices and wholly owned subsidiaries, HI Europe in London (www.hieurope.com), Novatris in Paris (www.novatris.com), and through an independent global network of affiliate market research companies. EOE M/F/D/V.
1) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
2) As of September 30, 2005.
