Gold Glitters, Cars Beckon for Americans

August 30, 2011

gallup-gold-aug-2011.JPGThirty-four percent of Americans say gold is the best long-term investment, more than say so about four other types of investments, according to results of an August 2011 Gallup poll. Real estate (19%) and stocks (17%) are distant second and third choices, followed by savings accounts/CDs.

Gold is Americans’ top pick as the best long-term investment regardless of gender, age, income, or party ID, but Gallup data shows men, seniors, middle-income Americans, and Republicans are more enamored with it than are other Americans. Gallup points out that traditionally, gold has been a safe haven in times of economic and political turmoil. The demand for gold has soared in recent years, as the financial crisis engulfed the global banking industry, which Gallup says may mean a bubble is occurring.

In other less-than-encouraging signs on the US economy from Gallup, another August poll reveals that Americans’ confidence in the economy is weak but stable after ratcheting sharply downward in July. The Gallup Economic Confidence Index registered -53 for the week of August 15-21, identical to the first two weeks of August but well below the -34 of July 4-10 and 20 percentage points below where it stood a year ago.

Auto Sales Slowly Accelerate

jdpower-saar-aug-2011.JPGHowever, not all recent US economic developments are negative. For example, new vehicle retail sales for August have yet to spark a stronger recovery, but the selling pace continues to increase slowly from its low point in May, according to J.D. Power and Associates, which gathers real-time transaction data from more than 8,900 retail franchisees throughout the US.

August new-vehicle retail sales are projected to come in at 898,000 units, which represents a seasonally adjusted annualized rate (SAAR) of 9.9 million units. The retail selling rate is 4% higher than 9.5 million in July, although volume remains essentially flat. J.D. Power says retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

Airfares, Hotel Rates Climb

In other encouraging economic research, American Express Global Business Travel analysis shows that average domestic one-way and international airfares, as well as average domestic and international hotel rates, all rose in Q2 2011 compared to Q2 2010. Domestic hotel rates particularly shone, climbing 8% from an average of $240 per night to $260 per night.

American Express says tickets for both domestic and international flights have been consistently higher for companies throughout 2011 compared to each respective month in 2010. Having passed the pre-recession pricing levels last quarter, airfares have continued to rise. The year-to-date average fare increase has slowed the last two months, however, suggesting that fares may be stabilizing. Meanwhile, recovery in the hospitality industry continues with many companies paying more for their travelers to book accommodations.

Personal Income Edges Up

And in one more positive piece of research, US consumers’ personal income increased $42.4 billion, or 0.3%, and disposable personal income (DPI) increased $32.5 billion, or 0.3%, in July, according to the Bureau of Economic Analysis.

Personal consumption expenditures (PCE) increased $88.4 billion, or 0.8%. The small increases build on results in June, when personal income increased $27.7 billion, or 0.2%, DPI increased $22.6 billion, or 0.2%, and PCE decreased $14.3 billion, or 0.1%, based on revised estimates.

So despite mediocre economic confidence and a mini-gold rush, Americans still seem willing to spend a slowly increasing reservoir of money. Marketers should approach their potential customers with cautious optimism, emphasizing value and durability of the products and services they offer.

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