ChangeWave’s latest consumer spending survey, conducted October 27 – November 3, 2008, shows a giant downturn in U.S. consumer spending going forward.
The survey of 2,763 U.S. consumers focused on spending patterns for the next 90 days, including the holiday season.
The current consumer pullback is even more pronounced than the major leg downward seen in ChangeWave’s September survey. Nearly three-in-five (59%) respondents now say they’ll spend less money over the next 90 days, 7-pts worse than previously. Only one-in-ten (10%) say they’ll spend more – 8-pts worse than previously.
“These findings strongly support the thesis that fourth-quarter earnings will be far more painful than currently expected,” said Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing, in the press release.
Weak Outlook Hits All Major Spending Categories: Spending is down for all consumer categories this holiday season compared to the previous holiday season (Nov 2007 survey). And in nearly all instances, spending is down compared to just six weeks ago (Sep 2008).
Consumer Electronics remains one of the weakest of all spending categories, a big change from past holiday seasons when a surge in the sector normally occurs at this time of the year. Only 19% say they’ll spend more on Consumer Electronics over the next 90 days compared to 43% who say less – a net 40-pts worse than one year ago.
Spending on Restaurants/Everyday Entertainment also looks particularly weak, down a net 39-pts from a year ago to a new all-time low. Moreover, Consumer Durable Goods is now registering a new all-time low.
Primary Reasons for Spending Less: Saving More Money (33%; up 7-pts) and Reducing Debt (31%; up 2-pts) were cited as the dominant reasons by those consumers who say they are spending less. Reduced Income (33%; up 7-pts) has also shot up as a dominant reason.
Tiny Uptick in Consumer Sentiment: The survey also asked respondents about their current impressions of the economy. While consumer sentiment still looks awful, some of the indicators aren’t quite as dire as in September.
A total of 15% now think the overall direction of the U.S. economy is going to improve over the next 90 days – 3-pts better than a month ago. And while a huge 57% believe the overall direction of the U.S. economy will worsen, that number is 9-pts better than previously.
In another small positive, 14% now say they are More Confident in the U.S. stock market than they were 90 days ago, 7-pts improved from previously. Nearly two-thirds (64%) continue to say they’re Less Confident, but that’s also a 5-pt improvement.
But even as the above findings show the slide in consumer sentiment may be stabilizing, there are other far less encouraging signs. Two-thirds of respondents (64%) report dissatisfaction with their personal finances, a whopping 15-pt jump since September. In addition, 76% say the current state of the economy is worse than they thought it would be 90 days ago – a 2-pt increase from previously.
Retail Store Trends: For the sixth consecutive survey, Costco (COST; Net Score = +8) and Wal-Mart (WMT; +5) remain the retail leaders going forward. Once again, it’s traditional retailers – Sears (SHLD; -13), Bed, Bath & Beyond (BBBY; -12), Macy’s (M; -10), JC Penney (JCP; -9) and Linens N Things (-8) – that are showing the greatest weakness going forward.
Holiday Gift Shopping: By a 12-to-1 margin (48% Spending Less Money vs. 4% Spending More Money), respondents report they’ll spend less money on holiday shopping this season than they did a year ago. Consumers also say they’ll be buying gifts for fewer people compared to a year ago.
In terms of home entertainment shoppers, discount retailers Wal-Mart (18%; up 5-pts), Sam’s Club (12%; up 3-pts) and Costco (27%; up 3-pts) are the clear momentum leaders for the holiday season. On the downside, the findings point to a very weak holiday season for electronics retail leader Best Buy (BBY), with only 44% saying they’ll shop there over the next 90 days – a 3-pt decline from September 2008.
Good News for Apple: ChangeWave’s survey on PC purchasing (October 23 – November 3, 2008 survey of 3,699 consumers focused on personal computer demand for the next 90 days) shows weaker demand for the holidays mixed with some signs of hope for Apple. In a bit of good news for Apple, their newly revamped MacBook line has been gaining traction with consumers, thereby helping spur an uptick in overall Mac demand.
The new MacBooks feature aluminum unibody enclosures and improved graphics, as well as glass multi-touch trackpads. A total of 7% of respondents now say they’re likely to buy one over the holidays.
In addition, another 6% say they’re likely to purchase one of the traditional White MacBook Laptops, which Apple recently lowered the price on to $999.
In sum, looking at all respondents planning to buy a laptop over the next 90 days, one-in-three (33%) say they’ll purchase an Apple – up 4-pts since September. Among desktop purchasers, 27% plan to buy an Apple desktop, a 1-pt increase.
While these numbers are an improvement over ChangeWave’s September survey, they are still below their August results. In terms of desktops, the current figures are 2-pts below those of a year ago.
It’s not easy to increase market share in one of the worst spending environments in years, but thanks to their refreshed line of MacBooks, Apple is showing some signs of improvement midst the current consumer spending turmoil.
To review the complete findings from the Consumer Spending Report, click here.
To review the complete findings from the Consumer PC Purchasing Report, click here.