Overall self-reported daily consumer spending in stores, restaurants, gas stations, and online averaged $55 per day in the week ending Jan. 9 , 2011, according to new Gallup data. This is down 27% from the $75 average for the month of December 2010 (a post-holiday drop was expected), but also well below the $68 average for the same week in 2010.
Spending Trends Reflect ‘New Normal’
Throughout 2010, consumer spending remained relatively close to that of 2009, which Gallup says reflects the “new normal” trend of consumers permanently becoming more price-conscious. Spending surged in December of each year and then fell back in January as expected, given seasonal spending trends; Gallup’s spending data are not seasonally adjusted.
Gallup says that weather may be partly responsible for the sharper drop in early January 2011; but regardless, there are no signs that an improvement in consumer spending is taking place in early January 2011.
Upper-Income Spending Dips
The early January drop follows a December surge where upper-income spending was $144 in December 2010, up 9% from $132 in the same month in 2009. Gallup analysis indicates that upper-income Americans appear to have the ability to spend more freely when they choose (as evidenced by a dramatic 33% year-over-year increase in May 2010), but don’t always seem to want to do so.
Lower-, Middle-Income Spending Also Down
Lower- and middle-income Americans’ self-reported spending averaged $45 per day during the week ending Jan 9, 2010, down 17% from $54 a year earlier. Spending by these Americans making less than $90,000 a year had increased to $63 in December, on par with December 2009. Gallup analysis suggests it may be that lower- and middle-income consumers pulled back on their early January spending to compensate for their relative spending surge during December.
Gallup Data Suggest ‘New Normal’ Spending Patterns May Continue in 2011
As consumers continue to deleverage, by not only paying down their debts, but also using less new credit, Gallup analysis indicates it may be that the “new normal” spending patterns of 2009-2010 will continue unabated in 2011.
Lower- and middle-income consumers, who remain focused on using cash, may spend more on holidays and for special events, but then feel the need to pull back on spending shortly thereafter to compensate. Upper-income consumers, who have more disposable income to spend, might splurge at certain points during the year, but hold back on their spending more generally, as they did in 2009 and 2010.
US Economic Confidence Flat
Other recent Gallup data shows that Gallup’s Economic Confidence Index improved to -21 during the week ending Jan. 9, 2011, which was considerably better than December’s -28, but essentially the same as the -22 of the same week in 2010. Gallup’s Economic Confidence Index consists of two measures showing improvement: one gauging Americans’ perceptions of current economic conditions and the other, their economic outlook.
In Gallup Daily tracking from Jan. 3-9, 2010, 42% of Americans called current economic conditions “poor,” slightly fewer than the 44% average rating of December 2010. The 53% who in January said economic conditions are “getting worse” was somewhat better than the 59% of December.