NEW YORK, November 4, 2010 In a reflection of continuing concern about the U.S. economy, 46 per cent of Americans plan to spend less this year than last on holiday shopping, and an additional eight per cent plan to spend nothing at all. Even half (50 per cent) of families with children at home plan to spend less, with an additional six per cent of these families planning to spend nothing at all, according to data from the monthly RBC Consumer Outlook Index. In a worrisome sign for retailers, just seven per cent of Americans overall, and nine per cent of families with children, expect to spend more this holiday season than last.
The survey, conducted immediately before this week's U.S. midterm elections, showed that the number of consumers who believe the country is headed in the right direction slipped to 35 per cent, down from 37 per cent in October. The number who believe the country is on the wrong track edged up two points, to 65 per cent. In addition, 69 per cent of Americans think the U.S. economy and their own financial situation will stay the same or worsen over the coming year.
"Even in the face of soft consumer confidence, spending accelerated in the third quarter. This disconnect will have to be resolved, and the first real test is upon us with the beginning of the holiday shopping season," said Marc Harris, co-head of Global Research at RBC Capital Markets. "If it turns out that the spending last quarter was simply the result of pent-up demand and consumers are returning to frugality just in time for the holidays, this will not come as good news for retailers."
Americans' reluctance to increase or even maintain their holiday spending is consistent with the continued weak consumer confidence reflected in the results of the latest RBC Consumer Outlook Index, which edged up this month to 42.0 on a scale of 0-100. This month's score was only slightly higher than the 41.0 in October and the 39.9 of November 2009. The consumer confidence barometer has been essentially flat since a surge in the middle of last year.
The scores of the RBC Consumer Outlook Index's sub-indices for November, all on a scale of 0-100, were also slightly higher, noting small improvements for the Current Conditions (31.6 this month vs. 30.8 in October); Expectations (54.1 this month vs.53.5 in October); Investments (35.9 this month vs. 35.3 in October); and Jobs (49.4 this month vs. 47.5 in October) sub-indices.
This month's index reflects the analysis of data from a survey of 1,032 U.S. adults taken October 29-November 1, 2010.
"The RBC Consumer Outlook Index saw a modest improvement this month but remains stuck in the same range that it has been in since the middle of last year," said Harris. "Confidence is effectively shackled by continued uncertainty around a weak economic recovery that has produced the second-fewest number of jobs at this point in a post-war recovery. The real indicator of where consumer confidence is headed will come in the next few weeks, as Americans digest the results of the midterm elections."
Additional highlights from the November 2010 RBC Consumer Outlook Index:
About The RBC Consumer Outlook Index
The RBC U.S. Consumer Outlook Index provides the most up-to-date and comprehensive outlook of U.S. consumers based on data collected from interviews with a nationally representative sample of more than 1,000 U.S. adults conducted over a multi-day polling period each month by Ipsos, the world's second-largest market and opinion research firm. The results in this news release reflect some of the findings of the Ipsos poll of 1,032 U.S. adults conducted October 29-November 1, 2010. The RBC Consumer Outlook Index is released within 36 hours after the U.S. online panel members are interviewed. Weighting is employed to balance demographics and ensure that the survey sample's composition reflects that of the U.S. adult population according to Census data and to provide results intended to approximate the sample universe.
Effective this month, the RBC Consumer Outlook Index has been re-scaled to correspond with a 0-100 scale in order to maximize the interpretability of month-to-month and year-over-year changes in consumer outlook. The Consumer Outlook Index is still based on the same set of underlying questions and continues to capture the same sense of American consumer confidence. The new bounded range for the RBC Consumer Outlook Index produces more controlled monthly fluctuations, which enables greater ability to diagnose meaningful changes across the time series. Re-scaled scores have been calculated retroactively for all historical data. The historical mean for the rescaled Consumer Outlook Index COI is 50. This indicates that a score over 50 represents above-average consumer confidence and a score below 50 represents below-average consumer confidence.
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