No Signs of a Bottom Survey shows continued decline in consumer spending and that the economic stimulus plan is likely to backfire By Paul Carton and Jim Woods ChangeWave's latest survey shows a continued deterioration in U.S. consumer spending trends with no signs, yet, of a bottom. And in a striking finding, the survey results suggest that the government's economic stimulus package is likely to backfire. The February survey of 3,773 consumers focused on spending patterns going forward. Here's what we found: Thirty-nine percent of U.S. respondents said that they'll spend less during the next 90 days than they did a year ago, which is five points worse than during January 2008, and the worst reading in a ChangeWave survey since 2002. 
Just 25% said that they'll spend more, which is four points worse than previously. Furthermore, the decline in spending growth is occurring across all income levels -- including the "super spenders," i.e., people who earn more than $150,000 per year. We asked respondents who were spending less to tell us why. Topping the list was inflation, with 40% pointing to it as the reason -- a four-point increase from our January 2008 survey and a full 10-point jump since November 2007. In another clear sign of consumer unease, 28% of those spending less said it's to save more money -- up three points since January. Consumer Electronics Spending Gets Whacked In one of the big surprises of the survey, consumer electronics spending appears set to take a huge hit going forward. The declines in this sector were greater than those of any other spending category. 
Only 19% said that they'll spend more on consumer electronics during the next 90 days, compared with 33% who said they'll spend less. All told, that's a net 10-point decline since January and the weakest outlook for electronics spending ever recorded in an Alliance survey. Economic Stimulus Package to Miss Target Perhaps the most striking finding came when we asked those who expect to receive the special tax rebate this spring to tell us how they'll most likely use the money. The results may come as a shock to analysts who believe that the government's economic stimulus package -- which features a one-time tax rebate check -- will jumpstart the U.S. economy. 
Rather than stimulate spending, the survey suggests that a strong majority of consumers will most likely use the special rebate to pay down debt (33%), invest (23%) or save (21%). By comparison, only a relatively small percentage said that they'll actually spend the money on consumer goods, which is the stated intent of this one-time shot to the nation's economic arm. These survey findings dispute the notion that consumers will race to spend their rebate checks, thereby stimulating the economy. Rather, they present a picture of an uneasy American public that appears more inclined to hunker down and wait out the current period of economic uncertainty. On a brighter note, the survey results point to two winning retail stores during the next 90 days -- Costco (COST) and Wal-Mart (WMT).
On the downside, Bed Bath & Beyond (BBBY), Macy's (M), Sears (SHLD), JC Penney (JCP), Kmart (part of Sears Holdings Corporation) and Gap Inc. (GPS) are showing considerable weakness going forward. Paul Carton is the Research Director of the ChangeWave Alliance. Jim Woods is ChangeWave's Senior Editor. The Alliance is a network of 15,000 highly-qualified business, technology and medical professionals in leading companies of select industries. The Alliance is surveyed weekly on a wide range of business and investment research and intelligence topics. | 
