NPD Consumer Spending Indicator Results Show Consumers in No Rush to Spend

With the distraction of the Presidential election behind us and the holiday season upon us, will consumers rebound? The November results of NPD’s Consumer Spending Indicator suggest consumers are not ready to head back to the stores, at least not yet.

The percentage of consumers who believe the economy is in a downturn increased again last month. In April, 84% of respondents said they felt the economy was either in or headed for a recession, in November that number increased to 91%. “Off-hand, that 7% increase may not sound like a lot,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc. “But when you turn the spending faucet of 14 million people off, that 7% 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 consumers back in to shop,” said Cohen.

July November
No Difference 34% 35%
Sales 28% 29%
Coupons 28% 28%

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% 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 seven point decline since April. Furniture was in the number three spot with 49% 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 number three spot.

Video games take the top spot as the least likely to see cut backs in consumer spending with 32%, followed by toys at 36%. This month, however, movies took the number three spot at 39%. Beauty slipped to forth this month at 41%. “But beauty is still showing that women remain loyal to their regimen even in tough times,” noted Cohen.

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% 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,” stated Cohen. “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.”