Despite a miniscule uptick this month in consumer spending and slightly improved consumer sentiment, the overall spending environment remains fiercely negative, according to the latest consumer study from ChangeWave Research.
Changewave reports that the results of its January consumer survey could mean that spending conditions are finally stabilizing after a prolonged slowdown. However, it is more likely that this improvement may prove short-lived and similar to what happened after the small May 2008 uptick that occurred as a result of the stimulus tax rebate program.
The combination of a new year, a new presidential administration, and lower inflation are likely contributors to the stabilization seen in the January survey, Changewave said.
Signs of a Tiny Uptick
For the first time since May 2008, there are signs of a consumer spending uptick, though it is very small.
While overall spending still looks dismal, the 90-day outlook is not quite as bad as it was in last month’s survey (December 2008), the survey found. More than half (57%) of US respondents still say they’ll spend less over the next 90 days than they did a year ago, 3 points better than in the December survey. Another 13% say they’ll spend more, 2-points better than previously.
Among those US consumers who say they’re spending less, reduced income (38%; up 1-point), saving more money (41%; up 2-points) and reducing debt (36%; up 3 points) are the top reasons why.
Over the past 6 months, the percentage of consumers saying they’re spending less in order to save more money has skyrocketed from 18% to 41%, and the percentage saying they’re reducing debt has jumped from 24% to 36%, Changewave noted.
A Bounce in Consumer Sentiment
Respondents were also asked about their current impressions of the economy, and – while things still look bad – results weren’t quite as dire as they were in December, the survey said.
A total of 12% think the economy will improve in the next 90 days, 3 points better than in December. And though 56% think the economy will worsen over the next 90 days – it is a 10-point jump from the December low.
Other sentiment indicators also show some improvement:
- 5% of consumers now say they are very satisfied with the current state of their personal finances, up 1 point from the previous record low. Another 39% say they’re somewhat satisfied, up 8 points since December.
- 26% say they are now more confident in the U.S. stock market than they were 90 days ago, 13 points better than previously. Only 31% say they’re less confident, a 25-point improvement.
Retail Store Trends
Since February 2007, ChangeWave’s consumer surveys have consistently pointed to two retail winners, Wal-Mart (Net Score = +6) and Costco (Net Score=+6). But while both still lead among retail outlets in terms of spending growth over the next 90 days, Costco has experienced a significant drop in its growth rate in the past six months (from +11 in July ’08 to +6 in Jan ’09), the study found.
As in previous surveys, the greatest weakness going forward is among traditional retailers – led by Bed, Bath & Beyond (-14), Sears (-12), Macy’s (-12) and JC Penney (-10).
Home Entertainment Shopping
For the third consecutive survey, Amazon (24%; up 1 point) is the clear momentum leader in home entertainment and networking shopping. The survey also shows encouraging results for Amazon’s electronic reading device, the Kindle, with 2% of respondents saying they’ve already purchased one, and 58% of current owners saying they’re very satisfied with the product.
Both Best Buy (37%; down 6 points) and Circuit City (7%; down 2 points) show significant weakness going forward. Changewave notes there was a similar decline after the 2007 holiday season, but both are considerably lower than a year ago.
In another negative for Best Buy, only 6% say they’ll spend more money there over the next 90 days, 1 point less than last month. Two-in-five (39%) say they’ll spend no money, a 12-point jump to the highest reading to date.
About the survey: The latest ChangeWave consumer survey of 2,798 U.S. consumers, was conducted Jan 5 – 9, 2009.
