Californians have been cutting spending, according to a new report, in stark contrast to the state government, which continues to spend more than it takes in.
The latest figures show state revenues last month were $811 million below projections. Nearly a billion dollars in just one month. Fiscal year to date, state income is running $1.5 billion below projections while state expenditures are $1.7 billion above — a $3.2 billion gap.
On the other hand, individual Californians appear to be doing a better job reining in spending.
"A majority of Californians — 60 percent — say the way they spend and save has forever changed in the wake of the economic downturn," says Citi's California Pulse report.
How are Californians cutting back? Here are Citi's findings:
- 71 percent are cutting back on going to restaurants
- 69 percent are spending less on clothes
- 64 percent are cutting spending on vacations and travel
- 63 percent are using credit cards less
- 54 percent are postponing a major purchase
- 47 percent plan to spend less this holiday season (only 7 percent plan to spend more)
Citi says the changes cut across all income levels, though people making more than $100,000 are saving more and paying down more debt. Residents in Northern California are more upbeat about the state compared to Southern California. At the same time, more L.A. residents than those in San Francisco say they are better off now than a year ago.
While nearly all Californians (91 percent) believe the Golden State's economy is fair to poor, they're more upbeat about their personal situations. "Nearly three quarters — 74 percent — say they feel better in control of their finances and more responsible in their borrowing and saving."
In a nation that has always encouraged people to spend, in an economy that is primarily based on consumers, people becoming more conservative with their money may be bad news.
Or maybe it's good news. With a greater sense of control and responsibility, seven in ten Californians say they feel "optimistic and hopeful."
Questions? Comments? Email us at consumernation@cnbc.com.
