By Paul Carton
Jean Crumrine co-wrote this article
ChangeWave's latest consumer spending survey shows a worsening in U.S. consumer sentiment and expectations.
Seven-in-ten (70%) consumers now believe the overall direction of the U.S. economy is going to worsen over the next 90 days - 6-pts more than a month ago. Only 7% believe the economy will improve - a decline of 1-pt to the lowest level ever in a ChangeWave survey.
The ChangeWave survey of 2,710 U.S. consumers was conducted March 3-10, 2009, and there were other sentiment indicators that echoed these findings, including:
66% of respondents reported they are dissatisfied with their personal finances - 7-pts worse than in February. Just 3% said they are Very Satisfied.
- 67% said they're Less Confident in the U.S. stock market than they were 90 days ago - a whopping 25-pts worse than previously. Only 7% said More Confident - 7-pts worse than previously. Once again, that's the worst ever for a ChangeWave survey.
In terms of actual spending, the best that can be said about the March survey is that the rate of consumer spending going forward is similar to the rate seen in February. In other words, the month over month spending rate is essentially flat.
On the upside, 13% of U.S. respondents now say they'll spend more money over the next 90 days - which is 1-pt better than in February. However, 62% say they'll spend less money, 1-pt worse than previously.
Impact of U.S. Stimulus Tax Credit Appears Far Different than Intended
We also asked respondents who expect to receive a tax credit as part of the recently enacted U.S. economic stimulus package, to tell us how they'll most likely use the money.
The results may be disheartening to those who believe the stimulus tax credit ($400 per individual/ $800 per family) will help jumpstart U.S. consumer spending.
While a strong majority of respondents say they're most likely to use the special tax credit to either pay down debt (34%), save the money (29%), or spend it on everyday items (29%), only a tiny percentage say they'll spend it on consumer electronics (2%) or big ticket items (1%).
As the above comparative chart shows, these results are even more bearish than our findings back in May 2008 on the likely usage of the Bush tax rebate checks.
Thus, these survey findings dispute the notion that consumers will race out to spend their tax credit and thereby stimulate the economy. Rather, the findings present a picture of an American consumer hunkered down and trying to wait out the recession.
Retail Spending Trends
Nonetheless, for the third month in a row, spending on Household Repairs/ Improvements has shown signs of inching up. And while Restaurant spending continues to be the weakest of all categories, here too we're seeing a slight improvement over a month ago.
Consumer Electronics spending, however, has once again recorded a record new low for a ChangeWave survey. Only 10% of respondents say they'll spend more on electronics over the next 90 days compared to 46% who will spend less - a net 5-pts worse than previously.
And there's more bad news for industry leader Best Buy (BBY). Even though its perennial rival has closed the doors for good, Best Buy shows no signs of capitalizing in terms of increasing its market share in home entertainment shopping going forward.
On the contrary, even with Circuit City gone only 33% say they'll shop at Best Buy over the next 90 days - 5-pts less than in February and the lowest level since we first began asking this question nearly three years ago.
On a brighter note, Amazon.com (AMZN) (26%; up 1-pt) continues to hold its own in the home entertainment and networking market, up 1-pt since the previous survey.