Massive Breakdown in U.S. Consumer Spending

Dismal 90-day outlook hits all major spending categories

By Paul Carton

If you think October was bad for U.S. retailers, wait till you see what's in store for November.

ChangeWave's latest consumer spending survey shows yet another giant downturn in U.S. consumer spending going forward. And, relatively speaking, it's far more pronounced than the October downturn.

The survey of 2,763 U.S. consumers, completed Nov. 3, focused on spending patterns for the next 90 days, including the holiday season.

Here's what we found:

Grim Outlook

Fifty-nine percent of respondents said they'll spend less money during the next 90 days -- seven points worse than previously. Only 10% said they'll spend more -- eight points worse than previously.

"These findings strongly support the thesis that fourth-quarter earnings will be far more painful than currently expected," said Tobin Smith.

But why are consumers spending less? And which retailers are going to take the biggest hit?

Read on to find out.

Cash In on the Crash

We live in interesting times. For options investors, it's the best time ever.

A simple put option that you purchase for 90 cents could be worth $20, $30 or even $60 in the blink of an eye.

Currently, investors are so skittish that shock rocks the market every moment of every day. But The Winning Edge is about making a killing in this shock-filled environment.

If you want to find out how you can make the next few weeks the best of your investment life and cash in on the crash, keep reading.

Hot Tickets From the Alliance

Each week Alliance members submit "Hot Tickets" as a way of presenting new observations and ideas on investable opportunities to ChangeWave. Today we're focusing on big pharma outsourcing, bailing out automakers and the resort business, to name a few.

* Note: These Hot Tickets are for informational purposes only. They do not represent recommendations from ChangeWave.

(1) Outsourced Drugs

BRA29431 writes: "In October, Covance (CVD) entered into a 10-year contract to provide most preclinical drug development services for Eli Lilly (LLY). This is an example of a trend toward big pharmaceutical firms contracting out major segments of research, development, manufacturing and marketing through alliances.

"Another example: Last year AstraZeneca (AZN) announced plans to outsource all manufacturing within 10 years."

(2) Big Three Bailout

JCH09713 writes: "The next bubble about to burst and potentially send the United States closer to a depression is the auto industry. If the government bails out General Motors (GM), Ford (F) and Chrysler without assuring they will innovate and heal, then they'll be in trouble again within a few years.

"But if they go under, millions of Americans will join the unemployment lines in a matter of weeks. And it wouldn't just be the Big Three's employees, but also ones from all the other businesses that depend on the U.S. auto industry to survive -- including parts suppliers, retail chains and advertisers."

(3) Troubled Resort Businesses

LAK09820 writes: "The co-op I belong to runs several resort businesses. The motels are running way below budget with a fear of continued lower income in 2009. Also, sales of real estate lots are much slower because people are stuck in their existing homes. And at the bars, people are not drinking as much -- although the bars are still profitable. Surprisingly, though, RV lots are significantly above budget."

(4) Eating Out Less

WDL02774 writes: "I concur with all the recent comments on fast food and restaurants. Except for Ruth's Chris Steak House (RUTH), I, too, said it would be the last time I'd eat out for a while. During this downturn, many restaurants might go under because customers have so many options. As an example, I now go to Whole Foods (WFMI) instead of going out. It's no bargain, but at least you get quality."

Learn Options From the Pros -- FREE!

Don't miss this opportunity to get your free subscription to the OptionsZone Insider.

This free weekly e-letter gives you tips straight from the pros along with the strategies they use every day to make millions.

Sign up now!

Can You Hear Me Now?

Cellular service provider trends loud and clear: AT&T leads in new customers; Verizon tops in satisfaction

By Paul Carton

In September, we surveyed 2,883 ChangeWave Research Network members on cellular service provider trends, and took a closer look at what is now a two-horse race for industry leadership between AT&T (T) and Verizon (VZ).

In the hotly contested battle for current market share among cell phone owners, AT&T (unchanged with 30%) holds a slight market share lead over Verizon (unchanged with 29%).

Verizon, however, is still the clear favorite in terms of customer satisfaction.

Forty-three percent said they are very satisfied with Verizon's service. AT&T is a distant second with 29%, followed by T-Mobile with 24%, and Sprint/Nextel (S) with 20%.

The Fight for Future Share

Looking ahead, respondents appear less likely to change cellular service providers during the next six months. Only 12% said they are either very or somewhat likely to switch providers. That number is down from 18% in our June 2008 survey.

So, who is making a switch?

Read on to find out.