With unemployment reaching 25-year highs, it is no surprise that Americans are nervous about their futures.  Over the last twelve months, confidence has nosedived as consumers worry about keeping their jobs, paying their mortgages and other bills, and their retirements.

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We are on the verge of a potential fundamental shift in how consumers shop and buy that could have ramifications long past economic recovery.  They are shopping less and changing the types of products they purchase, such as shifting to store brands and focusing on necessary items such as food and cutting back on luxuries.

At the same time, however, purchasing power is actually increasing for some Americans.  Consider the facts:

• The price of crude oil has declined 71 percent from July 2008 to February 2009 (from $133/bbl to $33/bbl), and retail gas prices have dropped 53 percent.  To fulfill annual driving needs in July 2008, consumers were spending an average of $3,045 at $4.06 a gallon; In February 2009, that figure declined to $1,440 at $1.92 a gallon – a savings of $1,605 per year.  And with the average American household owning two cars, the potential savings are even higher.

• Food inflation has moderated since July 2008 to current levels of 2 percent.

• While a great deal of attention has been focused on those people who had subprime mortgages and are now experiencing foreclosures on their homes, 30-year fixed mortgage rates have declined 1.30 pts during the same period, also resulting in potential savings.

• Tax credits in the stimulus legislation passed by Congress will put an additional $672 in the average worker’s pocket.

Combine these facts with a growing sense that we may be seeing the first signs of a bottoming out and many Americans will be well-positioned to resume their spending.  However, until the fear and uncertainty about the economy dissipates, it is unlikely that they will feel confident enough to exercise their increased purchasing power.  And once they do, there is little doubt that how they spend their money is likely to be very different in how they did so in years past.  Nielsen will continue to closely monitor consumer confidence, shopping trends and other factors to enable our consumer product manufacturing and retail clients to deliver value in the short term and innovate in the long term to help ensure continued growth.

Mortgage and loan companies, including Web-based companies, combined to spend 62% — or $778 million — less on advertising during the first three quarters of 2008, compared with the same time period last year.

Overall, ad spending by financial services companies dropped from $5.9 billion in Q1-Q3 2007 to $5.3 billion through September of this year, according to Nielsen.  Nielsen’s data excludes outdoor and B2B magazine ad spending.

Despite the struggling economy, some financial services advertisers have boosted their ad budgets.

Spending by credit services companies and their Web-based services jumped by 22% from Q1 to Q3 2008, while investment services companies and their Web-based services — the industry’s biggest ad spenders so far this year — spent 6% more this year than in Q1-Q3 2007.

Credit card services companies, the second-biggest spenders among all financial services categories, saw their numbers remain relatively unchanged, dropping by less than one percent from Q1 to Q3 2008, compared with Q1-Q3 2007.

Read coverage of Nielsen’s findings in The Hollywood Reporter, Adweek, and the St. Louis Business Journal.