Consumers Spending Less, Expectations Falling

Consumer spending in June has fallen as shoppers save more and pay down existing debt. According to a survey by ChangeWave, some 31% of respondents plan to spend less in the next 90 days, a jump of 5% since the May survey. Those who said they would spend more also totaled 31%, but that represents a -1% drop compared with May.

The ChangeWave data notes other significant points:

• Low-income households continue to be the weakest spending group, but the largest drop in June was among households with incomes of $100,000-$150,000.
• Spending declined in many categories, including home improvement, durable goods, restaurants, electronics, and travel.
• More than half (55%) of all respondents say that the US economy will get worse in the next 90 days — a jump of 19% since May — and only 12% say the economy will get better.
• In the past three months, consumer expectations have plummeted by a net 55%.
• More than 60% of respondents are less confident in the US equity market.

The trend toward lower spending is a replay of last summer’s experience according to ChangeWave. Besides saving more and reducing debt, 40% of those surveyed said they are spending less because their incomes are lower.

Falling gasoline prices have reduced concerns about rising energy costs, with just 14% of those surveyed giving those costs as a reason for reduced spending. That’s about the only good news to take away from the June survey.

Paul Ausick