Consumer Confidence-and Spending-on the Rise

By Rieva Lesonsky

There’s good news for small business in the latest Consumer Survey from BIGInsight: Consumer confidence is on the rise. In February, a solid one-third of consumers said they were either “confident” or “very confident” in chances for a strong economy. That’s an increase of 3 percentage points from January and the highest reading BIG Research’s monthly survey has seen since January 2008. (Of course, keep in mind that the economy isn’t out of the woods yet—consumer confidence is almost 40 percent below the pre-recession days of February 2007.)

However, consumers’ attitudes toward spending are more in line with pre-recession attitudes. After spending big over the holiday shopping season, consumers in the BIG study typically become more conservative in January as the holiday bills come rolling in. But February’s survey showed consumers spending more freely, with just 41.9 percent saying that they are trying to be “more practical” when spending. That’s down from 47.8 percent in January and, again, the lowest level of practicality consumers have displayed since early 2008. And when asked whether they’re spending on “needs” or “wants,” the percentage focusing on “wants” also rose compared to January, reaching a level similar to early 2008.

BIG says the drop in the official U.S. unemployment rate could be responsible for the free-spending attitudes. Asked what they thought would happen in the next six months in terms of layoffs, 22.9 percent thought there would be more, but the majority (54.3 percent) believe layoff levels will remain the “same,” while 22.8 percent are optimistic layoffs will decline. These figures are all slightly more optimistic than January’s numbers.

Slightly more than one-fourth say they plan to decrease overall spending over the next three months; that’s down 7 percentage points from January. However, savings is still top of mind, with about one-third planning to pay down debt and 28.2 percent planning to put more money into savings. To achieve these goals, almost four in 10 (39.1 percent) say they are shopping for sales more often.

But that doesn’t mean they’re not shopping. Asked about their plans to make purchases in the next six months, consumers’ intent to spend in all categories–including apparel, health and beauty, dining out, electronics, groceries, lawn and garden, household improvement, home furnishings and décor–is up compared not only to January, but also compared to the past two years.

It remains to be seen if the optimistic attitudes will hold, but if they do, you’d better be ready. Consumers have a lot of pent-up desire to spend, so be prepared to profit when they do.

Image by Flickr user Carlos A. Martinez (Creative Commons)

This entry was posted on Friday, February 24th, 2012 at 6:00 am and is filed under Marketing, sales process, Small Business, small business. You can follow any responses to this entry through the RSS 2.0 feed.


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