Slight Uptick in U.S. Consumer Spending for August But Longer Term Outlook Remains Clouded
ChangeWave’s latest consumer spending survey points to a slight uptick in U.S. consumer spending going forward — reversing the pullback found in our July survey.
But even though we’re seeing a positive uptick, there is little indication of any major spending expansion in the works for consumers. To the contrary, looking at the longer term, an astonishing one-in-three consumers report they’ve permanently changed their purchasing behavior and spending habits because of the recession — to focus on cutting costs and savings.
The August survey was composed of 2,705 U.S. consumers.
Slight Uptick in Spending for August
Nearly one-in-four U.S. consumers (24%) now say they’ll spend more over the next 90 days than they did a year ago — up 2-pts since our previous survey in July.
While 44% still say they’ll spend less, that’s 1-pt better than previously.
We note that spending is at exactly the same level registered in August 2008.
Small Improvement Across Multiple Categories
The improvement in consumer spending is occurring at all income levels, with Consumer Electronics, Travel/Vacation and Durable Goods spending the biggest immediate beneficiaries.
- For the first time since May we’re seeing improvement in Consumer Electronics spending, although the category remains relatively weak. A total of 16% say they’ll spend more on electronics over the next 90 days and 36% less — a net 3-pt improvement.
- After pulling back in the previous survey, Travel/Vacation spending has registered a net 2-pt improvement going forward.
- Consumer Durable Goods for the Home has also registered a 2-pt uptick — its first improvement in four months.
- Automobile spending is up 1-pt since July, from 7% to 8%.
But Longer Term Outlook Remains Cloudy
The August uptick not withstanding, when we look longer term we can still see the enormous toll the recession is continuing to take on the U.S. consumer.
Nearly two-thirds of respondents (63%) report they have changed their purchasing behavior and spending habits due to the recession. And among this group, more than half (55%) say they’ve permanently changed their behavior and spending habits to focus on cutting costs and savings, while only 43% say the changes are temporary.
In sum, what this boils down to is that better than one-in-three consumers (63% x 55% = 35%) say they’ve permanently changed their purchasing behaviors and spending habits because of the recession — an astonishing transformation the likes of which hasn’t been seen in recent years, and which clouds the long term outlook for consumer recovery.
NEXT – Retailers and Back-to-School Shopping
Retailers and Back-to-School Shopping
Will the back-to-school shopping season help jumpstart consumer spending for the Fall?
We asked respondents about their back-to-school shopping plans, and the results were decidedly mixed. The biggest negative: Only 28% of respondents say they’re shopping for back-to-school items this year — a major downturn from the 33% of a year ago.
The biggest positive: Among these responders, 35% report they’ll spend More Money than last year and just 20% Less, a net 4-pt increase from a year ago.
Discount Stores and Wholesale Clubs still remain the best positioned category, with 28% of Back-to-School shoppers saying they’ll spend more money at them and just 8% less (+20; down 2-pts).
In a hopeful sign, Home Furnishing/Accessories Stores (-9; up 5-pts), Electronics Retailers (-10; up 4-pts) and Online Shopping (+3; up 3-pts) all show a year-over-year improvement in terms of back-to-school spending.
But these positives are more than counterbalanced by the significant downturn in the total number of back-to-school shoppers compared to a year ago. Overall, the survey results point to a tough, end of summer, back-to-school shopping season.
Retailers Showing Some Momentum
The spending picture among the major retailers remains relatively unchanged from the July survey, with a couple of notable exceptions — likely due to back-to-school spending.
We note that Target (TGT; -3) remains unchanged from last month’s survey.
Importantly, Amazon (AMZN) continues to outperform in terms of online shopping and is widening the gap over its competitors. The percentage of consumers who say they will spend more money online at Amazon.com is up 2-pts since our May survey to a new high.
In another major positive for Amazon, 27% now say they’ll be shopping there for home entertainment and computer networking products over the next 90 days — a 2-pt jump.
Jean Crumrine co-wrote this article.