Americans Aren't Buying It: Notable Increased Financial Responsibility Trumps Consumer Spending

Americans are demonstrating more discipline when it comes to
discretionary spending, as only 5 percent of retirees and 10 percent of
workers were moved by special incentives and sales offered by retailers
to purchase items they "do not need." And as financial concerns mount,
significantly more workers (73 percent, up from 66 percent) and retirees
(66 percent, up from 59 percent) compared with the fourth quarter 2008
reduced their overall spending during the past two months, according to
the Index.

The Principal Financial Well-Being Index, which surveys both American
workers at growing businesses with 10 to 1,000 employees and retired
Americans, is released quarterly by the Principal Financial Group(R)
and commissioned by Harris Interactive(R).

"The American people get it -- we're experiencing some of the worst
economic conditions of our lifetime. Fear of the unknown has ushered in
an era of personal responsibility and discipline," said Dan Houston,
president of Retirement and Investor Services at The Principal(R).
"The decline in spending represents consumers willing to make tough
choices. Americans have pointed to specific conditions that would
trigger discretionary spending; however the economy has yet to yield in
making them comfortable enough to do so."

Stimulating the Economy -- What Will It Take?

When it comes to fueling the economy, Americans provided insight into
what would trigger them to spend more. Nearly half of workers (43
percent) and more than one-third of retirees (35 percent) said that a
major personal tax cut would get them to spend more. Another 40 percent
of retirees and 35 percent of workers indicated a significant rise in
the stock market would do it, while 23 percent of retirees and
one-quarter of workers pointed to lower interest rates. One-quarter of
both groups said that lower unemployment rates would encourage them to
spend more.

In It for the Long Haul -- Looking to the Future

Recent market volatility has caused about half of workers (49 percent)
to review their financial strategies. The Index also revealed growing
concern among Americans regarding their ability to save for retirement
(66 percent, up from 60 percent a year ago), which appears to have
encouraged them to take action and better prepare. Less than one-quarter
(20 percent) compared with last year (26 percent) indicated they have
not yet planned for retirement. Furthermore, 14 percent of workers
compared with last quarter (11 percent) indicated they have actually
increased the amount they are saving toward retirement.

Contrary to historical behavior, more than half of workers (58 percent)
are actively engaged in regularly or constantly checking the status of
their retirement accounts. The Index shows that among those with
retirement savings, nearly three-fourths (73 percent) are either saving
the same amount or have increased the amount they are saving toward
retirement, while 23 percent (compared with 14 percent during fourth
quarter 2008) have moved from volatile to more stable investments over
the past six months.

"Unfortunately, it took a financial crisis like this one to see real
behavioral change among American workers who are spending less and
reevaluating their commitment to financial security," said Houston.
"They are making short-term sacrifices while not losing sight of the
long-term financial stability. Seeking help from a financial
professional will help Americans modify their savings strategy during
this economic slowdown."

Other Key Findings:

--
Job Security -- More than two-thirds of workers (67
percent) expressed concern over their own personal job security. To
prepare for the worst-case-scenario, they are taking the following
actions:


--
43 percent have cut spending on miscellaneous items (e.g., eating
out, takeout coffee, entertainment, consumer purchases).

--
23 percent have tried to save more each month.

--
19 percent have cut fixed monthly expenses (e.g., gym membership,
media subscriptions, cable TV).

--
Taking a Second Job -- Workers have, or have considered, working
another job to make ends meet given the slowing economy and rising
prices:


--
9 percent have taken out a second job (up from eight percent
during fourth quarter 2008).

--
More than one-quarter (27 percent) have not taken out a second job
but are considering it (down from 36 percent last quarter).

--
Nearly two-thirds (65 percent) have not taken out a second job and
are not considering it (up from 55 percent last quarter).

--
Employer Raises -- Workers' expectations for receiving a raise
in 2009 are mixed:


--
Only 12 percent of workers have already received a raise from
their employer (down from 16 percent during first quarter 2007).

--
More than one-third of workers (35 percent) anticipate a raise
from their employer this year (down significantly from 49 percent
during first quarter 2007).

--
43 percent of workers do not anticipate a raise from their
employer this year (up significantly from 23 percent during first
quarter 2007).

--
Required Minimum Distribution -- The Internal Revenue Service
requires those with 401(k) or individual retirement accounts to begin
withdrawing from those accounts once they reach the age of
701/2-years-old. This requirement has been temporarily suspended for
2009 to help retirees better manage their accounts.


--
More than half of retirees (55 percent) were not aware that
Congress suspended this requirement for 2009.

--
10 percent indicated they will take full distribution in 2009.

--
6 percent said they will take distribution but less than their
full amount in 2009.

--
13 percent indicated they will not take any distribution in 2009.

--
Nearly two-thirds (59 percent) said this rule does not yet apply
to them, as they have not reached 701/2-years-old.

See the full report and past results at www.principal.com/wellbeing.

Methodology

This Principal Financial Well-Being Index(SM) survey was
conducted online within the United States by Harris Interactive on
behalf of the Principal Financial Group(R) between January 26,
2009 and February 9, 2009 among 1,155 employees and 540 retirees.
Results were weighted as needed for age by gender, education,
race/ethnicity, education, region and household income. Propensity score
weighting was also used to adjust for respondents' propensity to be
online. No estimates of theoretical sampling error can be calculated; a
full methodology is available.

This is one in a series of quarterly studies to identify and track
changes in the workplace of small and midsize (growing) businesses. The
first Principal Financial Well-Being Index(SM) survey was
conducted in the United States in 2000.

About the Principal Financial Group

The Principal Financial Group(R) (The Principal(R))(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 $247.0
billion in assets under management(2) and serves some 19.1
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 is a global leader in custom market research. With a
long and rich history in multimodal research that is powered by our
science and technology, we assist clients in achieving business results.
Harris Interactive serves clients globally through our North American,
European and Asian offices and a network of independent market research
firms. For more information, please visit www.harrisinteractive.com.

(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 December 31, 2008

SOURCE: Principal Financial Group

The Principal Financial Group 
Susan Houser, 515-248-2268 
houser.susan@principal.com 
or 
Fleishman-Hillard Inc. 
Brian Blaser, 212-453-2475 
brian.blaser@fleishman.com

For full details on Principal Financial Group (PFG) PFG. Principal Financial Group (PFG) has Short Term PowerRatings at TradingMarkets. Details on Principal Financial Group (PFG) Short Term PowerRatings is available at This Link.