|
ChangeWave Research Report: Consumer Spending Trends | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
ChangeWave Survey Points to a Recession in Consumer Spending January 9, 2008 Download the Adobe Acrobat PDF version of this report:
consumer_spending_20080114.pdf [88K] Overview Better than one-in-three respondents (34%) say they'll spend less over the next 90 days than they did a year ago – 9-pts worse than our November 2007 survey. Just 29% say they'll spend more – down 3-pts from previously. Note 36% say their spending will remain the same.
A Decline Across All Income Levels. The decline in spending growth is occurring across all income levels – even among respondents who earn more than $150,000 per year. Most importantly, while this is our fourth consecutive survey since June showing a consumer pullback, this is first time consumer spending growth has actually gone into the red. To put these findings in context, compare the latest January 2008 numbers above with the gradual contraction experienced more than a year earlier (see June through September 2006) in the period known as the “soft landing.” Clearly, the current contraction looks quite different from a soft landing. Note that consumer spending is responsible for more than two-thirds of total economic activity. Reasons for Spending Less. We asked the 34% of respondents who say they’ll be spending less to tell us why, and better than one-in-three (36%) pointed to Inflation – up 6-pts since November. Another 33% blamed Higher Energy Costs, 4-pts higher than previously. In a strong sign that consumers are worrying more about their nest eggs, 57% of those who are spending less say they’re trying to improve their personal finances – including reducing debt (32%) and saving more money (25%). These totals are also up 4-pts since November. Where is Spending Slowing? Nearly every consumer category we looked at in the survey scored lower than a year ago in terms of spending going forward – led by restaurant spending which has deteriorated a whopping 12-pts compared to year ago levels (see Jan 2008 vs. Jan 2007 in chart below).
Note we previously reported a decline in restaurant spending in our November 2007 Consumer Spending Report, where we said “Restaurant spending looks particularly hard hit this year, with just 19% set to spend more on eating out this holiday season and 22% less – a net 16-pts worse than last year" (see Nov 2007 vs. Nov 2006 in above chart). Other consumer spending categories down in the current survey include Travel/Vacation (-7), Consumer Electronics (-7), Durable Goods (-4) & Household Repairs/Improvements (-2). Other Signs of a Deteriorating Economy. In other signs of weakness – better than half (56%) of respondents now think the overall direction of the economy is going to worsen over the next 90 days, a huge18-pt jump since November. At the same time, only 9% believe the economy is going to improve, 7-pts worse than previously. In addition, nearly three-in-ten respondents (29%) say they are Unsatisfied with the current state of their personal finances, an 8-pt increase in this negative indicator since November. On a brighter note, the survey results did point to some winning stores regarding holiday gift shopping this year, with Costco (COST; Net Score = +7) leading the way in terms of spending growth. Note we previously reported bullish consumer spending findings on Costco in our November 2007 Consumer Spending Report, where we reported “Costco (COST) shows the most momentum with regards to spending growth for the holiday season… (and) shows momentum going forward.” On the downside, Bed, Bath & Beyond (BBBY; -4), K-Mart (SHLD; -4), The Gap (GPS; -4), and Sears (SHLD; -3) showed the weakest holiday numbers in the current survey. Summary of Key Findings
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Table of Contents
ChangeWave Research Methodology
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Introduction During the week of January 2-8, 2008 we surveyed consumer on their overall spending and shopping patterns including a close-up look at spending for the next 90 days. A total of 4,604 members of the ChangeWave Alliance participated. Total Respondents (n = 4,604) (A) Overall Consumer Spending (1) Question Asked: What about compared to this time a year ago? Would you say your overall spending over the next 90 days (including the Holiday Spending season) will be more than last year, less than last year, or the same as last year?
Decline in Spending. For the fourth consecutive survey since June we are witnessing a consumer spending pullback, but this this is first time consumer spending growth has actually gone into the red. Better than one-in-three respondents (34%) say they'll spend less over the next 90 days than they did a year ago 9-pts worse than our November 2007 survey. Just 29% say they'll spend more down 3-pts from previously. Note 36% say their spending will remain the same. To put these findings in context, compare the latest January 2008 numbers above with the gradual contraction experienced more than a year earlier (June through September 2006) in the period known as the "soft landing." Clearly, the current contraction is looking quite different from a soft landing. Decline Across All Income Levels. The decline in spending growth is occurring across all income levels even among those earning over $150,000 per year. We note that households earning Less than $50,000 first experienced a big drop in our survey two months ago. Current Survey (Jan 2008) Breakdown by Income Levels
Previous Survey (Nov 2007) Breakdown by Income Levels
Where is Spending Slowing? (2A) Question Asked: Which of the following consumer items will you be spending more money on over the next 90 days than last year? (Check All That Apply) (n=2,292)
(2B) Question Asked: And which of the following consumer items will you be spending less money on over the next 90 days than last year? (Check All That Apply) (n=2,292)
Change Between January 2008 and One Year Ago (Jan 2007)
Where is Spending Slowing? Nearly every consumer category we looked at in the survey scored lower than a year ago in terms of spending going forward led by restaurant spending, which has deteriorated a whopping 12-pts compared to year ago levels. Note we previously reported a decline in restaurant spending in our November 2007 Consumer Spending Report, when we said "Restaurant spending looks particularly hard hit this year, with just 19% set to spend more on eating out this holiday season and 22% less a net 16-pts worse than last year." (Comparison of Nov 2007 vs Nov 2006 in the above chart) Other consumer spending categories down in the current survey include Travel/Vacation (-7), Consumer Electronics (-7), Durable Goods (-4) & Household Repairs/Improvements (-2). (3) Question Asked: Let's focus on two of the biggest U.S. home improvement retailers Home Depot and Lowe's. Which of these two stores if any do you and your family most prefer to shop at for your household repair/improvement items? (n=2,292)
Lowes Stumbles. In a head-to-head match-up of the two U.S. home improvement giants, Home Depot (36%; up 2-pts) retains its advantage over Lowes (29%; down 1-pt), which fell below 30% for the first time since we began tracking this match-up in January 2007. Reasons for Spending Less We asked the 34% of respondents who say they'll be spending less to tell us why and better than one-in-three (36%) pointed to Inflation up 6-pts since November. Another 33% blamed Higher Energy Costs, 4-pts higher than previously. In a strong sign that consumers are worrying more about their nest eggs, 57% of those who are spending less say they're trying to improve their personal finances including reducing debt (32%) and saving more money (25%). These totals are also up 4-pts since November. (4) Question Asked: For those who will be spending less than last year, what are the most important reasons why? (Choose No More Than Three) (n=783) * November 2007 previous results have been adjusted for comparative purposes to reflect the new category groupings of the current survey.
Overall Economic Issues. (5) Question Asked: In your opinion, which of the following statements best describes the overall direction of the economy over the next 90 days? (n=2,312)
Other Signs of a Deteriorating Economy. In other signs of weakness better than half (56%) of respondents now think the overall direction of the economy is going to worsen over the next 90 days, a huge18-pt jump since November. At the same time, only 9% believe the economy is going to improve, 7-pts worse than previously. In addition, nearly three-in-ten respondents (29%) say they are Unsatisfied with the current state of their personal finances, an 8-pt increase in this negative indicator since November. (6) Question Asked: How satisfied are you with the current state of your personal finances? Are you very satisfied, somewhat satisfied, somewhat unsatisfied or very unsatisfied? (n=1,822)
(B) A Look Back At Actual Spending for the Holidays (1) Question Asked: Looking back at your overall holiday shopping, did you end up spending more on gift items, less on gift items, or about what you had expected on gift items during the holiday season? (n=2,312)
Actual Spending on Gift Items. When respondents were asked about their actual holiday spending, three-in-ten (30%) said they ended up spending More than expected on gift items, while 26% said they spent Less. This is a net 13-pts lower than a year ago confirming that this year's holiday spending season was significantly weaker than last year. (2) Question Asked: Focusing specifically on "consumer electronics" items (e.g., cell phones, PCs, flat screen TVs, DVDs, etc.), did you end up spending more on "consumer electronics" items, less, or about what you had expected on these items during the holiday season? (n=2,312)
We also asked about actual spending on consumer electronic items, and again the same pattern emerges the spending growth rate was less than a year ago. (3) Question Asked: Which of the following items did you purchase either as a gift for someone else or for yourself during the holidays? (Check All That Apply) (n = 2,312)
Electronics Winners. Within the slower spending environment, there were still a handful of clear winners in consumer electronics for the Holidays. Just as we projected back in our November 2007 Consumer Holiday Spending Report, Digital Cameras (21%; down 5-pts) topped the list, although it was down compared to a year ago. Other winning electronic items include Digital Picture Frames (12%), GPS Devices (13%; up 7-pts), Video Game Consoles (13%; up 2-pts) and Laptop Computers (12%; up 3-pts). (4) Question Asked: We want to learn more about how Alliance members spent their gift shopping dollars this Holiday Season compared with last Holiday Season. For each of the following stores, please tell us if you spent more gift shopping money, the same amount, or less gift shopping money this Holiday Season than you did last Holiday Season. (n = 2,312)
On a brighter note, the survey results did point to some winning stores regarding holiday gift shopping this year, with Costco (COST; Net Score = +7) leading the way in terms of spending growth. Note we previously reported bullish consumer spending findings on Costco in our November 2007 Consumer Spending Report, where we reported "Costco (COST) shows the most momentum with regards to spending growth for the holiday season (and) shows momentum going forward." On the downside, Bed, Bath & Beyond (BBBY; -4), K-Mart (SHLD; -4), The Gap (GPS; -4), and Sears (SHLD; -3) showed the weakest holiday numbers in the current survey. Looking back, here's what we said about, Bed, Bath & Beyond and Sears in our November report: "Bed, Bath & Beyond (BBBY) and Sears (SHLD) are likely to have the weakest holiday seasons among the stores looked at in this survey. "
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
This report presents the findings of a recent ChangeWave survey on consumer spending patterns. The survey was conducted between January 2-8, 2008. A total of 4,604 Alliance members participated in the survey. The Alliance's proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, interprets and reconciles the information in a cohesive manner and converts the information into valuable quantitative and qualitative reports. The Alliance has assembled its membership team from senior technology and business executives in leading companies of select industries. Nearly 3 out of every 5 members (56%) have advanced degrees (e.g., Master's or Ph.D.) and 93% have at least a four-year bachelor's degree. The business and investment intelligence provided by the Alliance provides a real-time view of companies, technologies and business trends in key market sectors, along with an in-depth perspective of the macro economy well in advance of other available sources.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
ChangeWave Research, a subsidiary of InvestorPlace Media, LLC, identifies and quantifies "change" in industries and companies through surveying a network of thousands of business executives and professionals working in more than 20 industries. ChangeWave has a very unique asset in its 13,000-member Alliance. We have assembled our membership team from a broad cross section of more than 20 vertical markets such as telecom, semiconductors, data storage, and biotechnology, along with a wide range of professional disciplines including CIOs, IT managers and programmers, executive management, scientists, engineers and sales personnel. The ChangeWave Alliance is composed of senior technology and business executives in leading companies – credentialed professionals who spend their everyday lives working on the frontline of technological change. This proprietary research and business intelligence gathering system provides a real-time view of companies, technologies and business trends in key market sectors along with an in-depth perspective of the macro economy – well in advance of other available sources. ChangeWave surveys its 13,000 Alliance members on a wide range of investment research topics and converts the findings into valuable investment and business intelligence reports. ChangeWave delivers its products and services on the Web at www.ChangeWave.com. ChangeWave Research does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report. For More Information:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
