Signs of a Pullback in U.S. Consumer Spending

   

The mixed picture we reported back in June has tightened in ChangeWave’s July consumer spending survey. And for the first time in four months we’re seeing a slight pullback in the 90-day spending outlook going forward.

The ChangeWave survey of 2,681 U.S. consumers has also picked up a weakening in consumer sentiment and expectations.

But is this simply a case of summer doldrums and the same type of bumpiness we also saw coming out of the last recession — or is it the start of a further sustained slowdown?

A Consumer Spending Pullback

After three consecutive months of improvements, the following chart shows the slowdown registered in our July U.S. consumer spending.

ipie spending 0106 0709 Signs of a Pullback in U.S. Consumer Spending

Better than two-in-five U.S. respondents (45%) now say they’ll spend less over the next 90 days — 2-pts worse than the previous survey in June. Only 22% now say they’ll spend more — 3-pts worse than previously.

A Mixed Bag Within Spending Categories

Several spending categories also registered a slight pullback, although some remained steady.

Travel/Vacation registered the biggest slowdown of any spending category going forward — although this is partially due to seasonal variation.

Consumer Durable Goods for the Home also fell 2-pts since the previous survey.

There’s little to cheer about in terms of Consumer Electronics spending as well. While 14% say they’ll spend more on electronics over the next 90 days, 37% say less (down 1-pt).

More positively, Restaurant spending remains unchanged from June, as does Automobile spending.

Consumer Sentiment and Expectations

Consumer expectations turned significantly more negative this month.

Well over a third of respondents (36%) think the overall direction of the U.S. economy is going to worsen over the next 90 days — an 8-pt jump since June. Another 22% believe it will improve — a 10-pt decline.

ipie expectations 0907 0709 Signs of a Pullback in U.S. Consumer Spending

Retail Store Trends

The spending picture among the major retailers remains relatively unchanged, with a couple of notable exceptions. Target (TGT; up 1-pt), in particular, has improved slightly compared to our June survey results.

ipie target 0208 0709 Signs of a Pullback in U.S. Consumer Spending

Wal-Mart (WMT) (+4; down 2-pts), on the other hand, has registered a decline in its growth rate for only the second time since September 2008.

The sluggish market is also having an impact on the giant electronics retailers. Only 37% of respondents now say they’ll shop at Best Buy (BBY) for home entertainment and computer networking products over the next 90 days — down 3-pts since June.

Even Amazon (AMZN; 25%) has dropped 3-pts in terms of home entertainment shopping over the past month — but we note that June represented the highest market share level ever recorded for Amazon in this key category.

The Bottom Line

The mixed picture we saw last month has tightened among consumers in our July survey. It’s still too early to know whether the current pullback is simply a temporary pause or the beginning of a more sustained slowdown.

It’s worth noting that consumer expectations were also down in Conference Board’s just released June index of leading economic indicators.

We’ll know a lot more directionally after next month’s ChangeWave survey, including whether the Back to School shopping season is going to help jumpstart consumer spending for August.

Related Articles:


Article printed from InvestorPlace Media, http://investorplace.com/2009/07/consumer-spending-retail-stocks/.

©2014 InvestorPlace Media, LLC

Comments are currently unavailable. Please check back soon.