Recession Fears Mount as Holiday Shopping Season Hits Full Stride

Nearly One-Third of Americans Plan to Spend Less This Holiday
Season; Americans Show Signs of Financial Discipline in the New Year
DES MOINES, Iowa--(Business Wire)--Volatile economic conditions and fear of a looming recession are
weighing on the minds of Americans as they descend on shopping malls
and online shopping sites this holiday season. The majority of
American workers (71 percent) and retirees (72 percent) said they
believe that the economy has fallen into a recession or fear that it
is headed in that direction, according to the latest Principal
Financial Well-Being Index(SM). More than one-third of workers (37
percent) expressed concern about their own job security, up
significantly from second quarter this year, when only 22 percent of
workers expressed concern.

The index, which surveys American workers at growing businesses
with 10 to 1,000 employees, is released each quarter by the Principal
Financial Group(R) and conducted by Harris Interactive(R). The index
also surveys retired Americans in recognition of the retiring baby
boomer generation.

According to the survey, if an economic slowdown forced workers
and retirees to reduce their spending, more than three-fourths of
workers (76 percent) and 49 percent of retirees say they would eat out
less often. Both groups said they would cut back on buying clothing
and consumer goods (69 percent of workers and 49 percent of retirees).
Almost two-thirds of workers (63 percent) and more than one-third of
retirees (39 percent) say they would cut back on entertainment to
reduce spending, such as going to movies and concerts. Americans even
indicated they would go as far as reducing their coffee intake -- more
than one-fourth of workers (27 percent) said they would purchase
coffee less often. Finally, 11 percent of workers indicated they would
lower their retirement plan contribution rate.

"Uncertainty about the direction of the economy clearly is top of
mind as Americans navigate the holiday shopping season, which has
turned into a gift giving extravaganza," said Dan Houston, executive
vice president of Retirement and Investor Services, The Principal.
"Americans are underestimating their real spending. To get on solid
financial footing, I recommend that every person set a budget,
prioritize gift purchases and use a high degree of fiscal discipline."

Spending for the Holidays

Americans are planning to tighten their financial belts when it
comes to spending during the holidays. When asked about their
intentions for spending this holiday season, 29 percent of workers and
retirees indicated they plan to spend less money than last year. More
than half of workers (59 percent) and nearly two-thirds of retirees
(64 percent) plan to spend the same amount as last year while 12
percent of workers and 7 percent of retirees plan to spend more money.
According to the survey, nearly half of workers and retirees (49
percent and 46 percent, respectively) are planning to spend between
$101 and $500 throughout the holiday season. Just more than one-fourth
of workers (27 percent) and less than one-fourth of retirees (22
percent) plan to spend between $501 and $1,000 this holiday season.

Stepping Into the New Year--Financial Resolutions

Americans were given a list of potential financial resolutions
they intend to make as New Year's resolutions in 2008. The top two
resolutions selected by workers were paying off credit card debt (40
percent), followed by putting a set amount of money into savings each
month (39 percent). Compared with fourth quarter 2006, significantly
more workers are making resolutions to save more each month (39
percent, up 6 percentage points from 2006) and to stop using their
credit cards (22 percent, up 4 percentage points from 2006). Less than
one-fourth of workers (23 percent) indicated they do not intend to
make a resolution, and nearly half of retirees (49 percent) have no
such plans.

"There still may be a financial hangover from last year's holiday
season," Houston said. "American workers need to put retirement
savings before buying the next plasma TV or cashmere sweater."

Too Much Plastic?

The index also reveals that more than one-third of workers (39
percent) report having credit card debt between $1 and $5,000 compared
to just 21 percent of retirees. While retirees have significantly more
credit cards in their name for personal use than do workers,
significantly more retirees than workers report having no credit card
debt (66 percent verses 33 percent). More than one-third (34 percent)
of retirees and 29 percent of workers reported they have five or more
cards. However, when asked how many of these cards they use on a
regular basis, only five percent of retirees and two percent of
workers reported using five or more cards regularly. On average,
retirees report having 4.4 credit cards in their name for personal use
compared with workers (3.7).

Know Your Credit Score?

At least six out of 10 workers (66 percent) and retirees (62
percent) have ordered a credit report in the past. However, more than
half of workers (51 percent) and six out of 10 retirees (61 percent)
do not know their credit score, despite the fact that Americans can
request a free annual credit report.

Methodology. The Principal Financial Group(R), the nation's 401(k)
leader, commissioned Harris Interactive(R) to conduct online research
with employees (ages 18+) of small and mid-sized (SMB) U.S. businesses
(firm size 10 - 1,000 employees) about their attitudes and perceptions
regarding their financial well-being and their current employee
benefits. To compare responses, Harris Interactive also interviewed a
group of retirees. Harris Interactive conducted The Principal
Financial Well-Being Index survey online among 1,154 employees and 514
retirees from October 22 to October 30, 2007. Data were weighted to be
representative of the entire population of adult employees working for
small to mid-sized U.S. businesses and retirees on the basis of age by
gender, education, race/ethnicity, region, income and propensity to be
online. With a probability sample size of 1,154 and 514, one can say
with 95 percent probability that the overall results would have a
sampling error of +/- 2.71 percentage points and +/- 4.21 percentage
points, respectively. Sampling error for data based on sub-samples may
be higher and may vary. However, that does not take other sources of
error into account. This online survey is not based on a probability
sample, and therefore no theoretical sampling error can be calculated.
This is one in a series of quarterly studies to identify and track
changes in the workplace of small and mid-sized (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 $306 billion in assets
under management(2) and serves some 18.3 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 the 13th largest and one of the
fastest-growing market research firms in the world. The company
provides innovative research, insights and strategic advice to help
its clients make more confident decisions which lead to measurable and
enduring improvements in performance. Harris Interactive is widely
known for The Harris Poll, one of the longest running, independent
opinion polls and for pioneering online market research methods. The
company has built what it believes to be the world's largest panel of
survey respondents, the Harris Poll Online. Harris Interactive serves
clients worldwide through its North American, European and Asian
offices, and through a global network of independent market research
firms. More information about Harris Interactive may be obtained at
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 September 30, 2007

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

Copyright Business Wire 2007