Slight Uptick in U.S. Consumer Spending for August But Longer Term Outlook Remains Clouded

ChangeWave's latest consumer spending survey points to a slight uptick in U.S. consumer spending going forward — reversing the pullback found in our July survey.

But even though we're seeing a positive uptick, there is little indication of any major spending expansion in the works for consumers. To the contrary, looking at the longer term, an astonishing one-in-three consumers report they've permanently changed their purchasing behavior and spending habits because of the recession — to focus on cutting costs and savings.

The August survey was composed of 2,705 U.S. consumers.

Slight Uptick in Spending for August

Nearly one-in-four U.S. consumers (24%) now say they'll spend more over the next 90 days than they did a year ago — up 2-pts since our previous survey in July.

While 44% still say they'll spend less, that's 1-pt better than previously.

We note that spending is at exactly the same level registered in August 2008.

Small Improvement Across Multiple Categories

The improvement in consumer spending is occurring at all income levels, with Consumer Electronics, Travel/Vacation and Durable Goods spending the biggest immediate beneficiaries.

• For the first time since May we're seeing improvement in Consumer Electronics spending, although the category remains relatively weak. A total of 16% say they'll spend more on electronics over the next 90 days and 36% less — a net 3-pt improvement.

• After pulling back in the previous survey, Travel/Vacation spending has registered a net 2-pt improvement going forward.

• Consumer Durable Goods for the Home has also registered a 2-pt uptick — its first improvement in four months.

• Automobile spending is up 1-pt since July, from 7% to 8%.

But Longer Term Outlook Remains Cloudy

The August uptick not withstanding, when we look longer term we can still see the enormous toll the recession is continuing to take on the U.S. consumer.

Nearly two-thirds of respondents (63%) report they have changed their purchasing behavior and spending habits due to the recession. And among this group, more than half (55%) say they've permanently changed their behavior and spending habits to focus on cutting costs and savings, while only 43% say the changes are temporary.

In sum, what this boils down to is that better than one-in-three consumers (63% x 55% = 35%) say they've permanently changed their purchasing behaviors and spending habits because of the recession — an astonishing transformation the likes of which hasn't been seen in recent years, and which clouds the long term outlook for consumer recovery.

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