Most recent data on consumer confidence, particularly the carefully followed Conference Board study, show an erosion in sentiment from the spring. There is every reason to believe that second quarter GDP will be revised down from the initial 2.4% annual expansion rate because of the July trade deficit. Numbers from both the public and private sectors have indicated weakness in the housing and retail markets. Initial jobless claims jumped unexpectedly last week to a six month high.
Nearly every one of these figures is based on small sampling sizes and are therefore prone to some degree of error. The difference between positive move in an index and a negative one may be based on just a few answers in any given economic poll.
The latest ChangeWave survey of consumer retail spending – which has a large sample size of 2,739 U.S. consumers – showed a small tick up in August compared to July. The poll was completed on August 10.. If the slight improvement in their study turns out to be accurate, then it means a stabilizing is occurring in U.S. consumer spending for August – which is welcome news after the pullback ChangeWave picked up in their June and July surveys. Moreover, a very modest improvement for August would be better than many forecasters predict.
The ChangeWave data shows “Nearly one-in-three respondents (32%) 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. Another 32% say they’ll spend less – unchanged from previously.”
In terms of consumer sentiment and expectations, the survey has picked up a major bounce back from the weak readings of the past two months in their surveys.
On a more granular level, “For the first time since May we’re seeing a modest improvement in Consumer Electronics spending, with 17% of respondents saying they’ll spend more over the next 90 days and 31% less – up a net 4-pts since July.” Automotive figures also rose.
Within the retail sector, ChangeWave says it expects slight improvement in activity at Costco, Macy’s, and Bed Bath And Beyond during the next 90 days. ChangeWave also expects a stabilizing in Walmart’s U.S. sales which have been weak for several months.
ChangeWave also reports that “Amazon has experienced its biggest consumer spending uptick in eight months, with more than three-in-ten respondents (31%) saying they’ll shop at Amazon for their home entertainment/computer networking products over the next 90 days – a 5-pt jump since July.” It is not clear how much of that has to do with a surge in demand for the Amazon Kindle e-reader and how much can be attributed to sales of other electronic products.
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