The Federal Reserve has confirmed what many consumers already knew: During the recession, many of us used more cash and cut down on credit and debit card spending. We also bought less stuff, and kept more cash on hand for emergencies.
The report, published last week by the Federal Reserve Bank of Boston, found that the recession caused a big change in how Americans spend. For years before the recession, the number of debit and credit transactions grew, while the number of cash transactions fell.
That changed in 2009, when the average consumer’s number of cash payments per month jumped 27%, from 14.5 cash payments per month to 18.4. Meanwhile, the average number of monthly debit card payments declined from 21 per month to 19, a 15% drop.
The question now is whether this trend will continue.
“The findings released today raise the important question of whether this move signals a permanent reversal or a transitory response to the severe recession,” according to a press release by the Boston Fed.
The report also found that the average consumer made 64.5 payments of all kinds every month in 2009, a slight decrease from 67.4 the previous year. Consumers also kept slightly more cash on hand as the recession hit. On average consumers had $291 available in 2009, up from $230 in 2008.
Percentage-wise that’s a big increase—26% in just one year. Still, it’s pretty sobering news that the average American doesn’t even have enough cash on hand to cover one month’s rent.
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Image: mangpages, via Flickr