ChangeWave’s latest survey contains some intriguing signs that consumer spending may finally be stabilizing after a prolonged, horrendous slowdown – including the first tiny spending uptick in eight months coupled with improved consumer sentiment.
At the same time, the overall spending environment remains fiercely negative and this momentary improvement may well prove short-lived – similar to what happened after the tiny 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 this latest ChangeWave survey of 2,798 U.S. consumers, conducted Jan 5 – 9, 2009.
Signs of a Tiny Uptick
For the first time since May 2008, there are signs of a consumer spending uptick, albeit tiny.
While overall spending still looks terrible, the 90-day outlook is not quite as horrible as it was in last month’s survey (December 2008). Better than half (57%) of U.S. respondents still say they’ll spend less over the next 90 days than they did a year ago – but that’s 3-pts better than in the December survey. Another 13% say they’ll spend more – 2-pts better than previously.
Among those U.S. consumers who say they’re spending less, Reduced Income (38%; up 1-pt), Saving More Money (41%; up 2-pts) and Reducing Debt (36%; up 3-pt) are the top reasons why.
We note that over the past 6 months, the percentage 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%.
A Bounce in Consumer Sentiment
Respondents were also queried on their current impressions of the economy, and once again – while things still look bad – they don’t appear quite as awful as they did in December.
A total of 12% think the economy will improve in the next 90 days – which is a notable 3-pts better than in December. And while 56% think the economy will worsen over the next 90 days – that’s still a significant 10-pts better than the December low.
Other sentiment indicators also show some improvement:
• 5% now say they are Very Satisfied with the current state of their personal finances, up 1-pt from the record low recorded previously. Another 39% say they’re Somewhat Satisfied, up 8-pts since December.
• 26% say they are now More Confident in the U.S. stock market than they were 90 days ago, 13-pts better than previously. Only 31% say they’re Less Confident, a whopping 25-pt improvement.
Retail Store Trends
Since February 2007, ChangeWave’s consumer surveys have consistently pointed to two retail winners, Wal-Mart (WMT; Net Score = +6) and Costco (COST; +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).
Once again, the greatest weakness going forward is among traditional retailers – led by Bed, Bath & Beyond (BBBY; -14), Sears (SHLD; -12), Macy’s (M; -12) and JC Penney (JCP; -10).
Home Entertainment Shopping – Next 90 Days
For the third consecutive survey, Amazon (24%; up 1-pt) is the clear momentum leader in home entertainment and networking shopping. Also, the survey showed 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 Amazon product.
Both Best Buy (37%; down 6-pts) and Circuit City (7%; down 2-pts) show significant weakness going forward. 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-pt less than last month. Two-in-five (39%) say they’ll spend No Money, a 12-pt jump to the highest reading to date.
Source: ChangeWave
If people are not buying new homes, cars, boats, … and they still have a job, then they surely have the cash to treat themselves and their family to a new Mac and maybe that iPhone or iPod touch that they have been wanting.