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The percentage of consumers who believe the economy is in a downturn increased again last month. In April, 84 percent of respondents said they felt the economy was either in or headed for a recession, in November that number increased to 91 percent. “Off-hand, that 7 percent increase may not sound like a lot,” says Marshal Cohen, chief industry analyst, The NPD Group, “but when you turn the spending faucet of 14 million people off, that 7 percent from April to November represents trillions of dollars.”
Are consumers motivated by all the sales retailers held during the preceding month? The number of consumers that say they would take advantage of sales or coupons has remained relatively steady since July. “So those huge sales that were designed to lure the customer in really don’t seem to have had much of an impact. They aren’t bringing the consumer’s back in to shop,” Cohen says.
Where do consumers say they will be cutting back? Most tell NPD that their cutting back will be on dining out. Fifty-seven percent of respondents say they are looking to spend less there. That is followed by cuts in spending on apparel. In the November Consumer Spending Indicator, 52 percent of respondents said they would cut back on apparel spending. Consumers have shown a continual decline in their desire to spend on apparel, with a 7 point decline since April. Furniture was in the No. 3 spot with 49 percent stating they plan to spend less.
The same categories that were the least vulnerable in last month’s study remain so in the current month’s study with one slight change. Video games and toys remain steady while beauty is being edged out of the No. 3 spot.
Video games take the top spot as the least likely to see cut backs in consumer spending with 32 percent, followed by toys at 36 percent. This month, however, movies took the number three spot at 39 percent. Beauty slipped to forth this month at 41 percent. “But beauty is still showing that women remain loyal to their regimen even in tough times,” Cohen says.
As previously noted, an important measure of how consumers are fairing is how secure they feel about their jobs. Here there is a sign of caution. In July, 25 percent of respondents said they were not concerned about their jobs, but in November 19% say they are not concerned. “This is a number I watch very closely,” Cohen says. “I think it is the best indication of consumer behavior and now, what with the stock market, the political market, the media market and now, the job market we are seeing an all time low here.”