By Claudia Benshimol Severin and Anne Martinez

Not so fast: Six months ago, Americans thought they had turned the economic corner.
Fewer were worried about losing their jobs and they were quietly optimistic that the
worst was over.

Now they are not so sure. Consumers are feeling noticeably less confident about the economy than they were six months ago. They don’t believe things are going to get better in the next year. Job insecurity is rising. There is one particularly striking change – one that has to be troubling to policymakers as well as business people. Optimism about the economy, defined as the percentage of respondents who expect their ability to make ends meet to get better in the next year, has slumped to 23%, down from 35% in March 2011 and 41% in September 2009. 

That’s the gloomy bottom line in McKinsey’s most recent survey of American consumers. Every six months since August 2008, McKinsey has asked a representative sample of 1,000 Americans what they think about the economy; their view of the future; and how these opinions are shaping their buying decisions. The result is a unique  data set that tracks how attitudes have changed over the past three years. This time, McKinsey also evaluated the data to highlight the attitudes and actions of Hispanic Americans.

If there is a silver lining around these clouds of doubt, it is that consumers appear to be acting a little more confidently than they are saying. Specifically, fewer of them are cutting back on dining out, a trend reflected in a slight increase in foodservice sales. In general, it appears that when it comes to reducing spending, consumers are slowing down. When it comes to things like hair coloring and nail care, fewer consumers are cutting down on frequency; opting to do it themselves; or having their friends do it. (Apparently, such amateur substitutions were less than satisfying.) In addition, fewer are trading down to cheaper brands on items like skin care and household  cleaning supplies.

The other way to look at it, though, is that there is only so much cutting any household can do; it’s not surprising that three years after the Lehman shock of August 2008, consumers are finding less fat to trim from the household budget. Even so, 45% of those surveyed said they had cut spending in the last year.

Here are three other intriguing conclusions from the most recent survey, conducted in September.

To see the rest of the report, download the PDF (at right).