In a trend that likely portends another poor shopping season for retailers, Gallup reports U.S. Consumers’ Spending Anemic in October
Americans’ self-reported spending in stores, restaurants, gas stations, and online averaged $62 per day during the first four weeks of October. That figure is up from $59 in September and is about the same as the $63 figure from August. From a broader perspective, spending remains in the 2009-2010 new normal monthly average range of $59 to $72 and is far below the 2008 recessionary spending range of $81 to $114.
Gallup’s consumer spending measure over the last two weeks (ending Oct. 17 and Oct. 24) has averaged $67 per day and $65 per day, respectively, slightly higher than the estimate for all of October to date. The increase is likely a result of Halloween shopping, given that in the past, Gallup has seen increases in spending during the second half of October.
Weak Christmas Spending Plans
Please consider Consumers Issue a Cautious Christmas Spending Forecast
Gallup’s initial measure of Americans’ 2010 Christmas spending intentions finds consumers planning to spend an average of $715 on gifts, roughly on par with the $740 recorded in October 2009.
Americans’ average prediction of the total amount they will spend on Christmas gifts this year is not highly encouraging for retailers, who may be hoping for a return to pre-recessionary buying habits. The good news, however, is that the $25 decline in this year’s October forecast is far less than what Gallup found in each of the prior two years at this stage in the season and, according to Gallup modeling, would point to a fairly flat year in holiday retail sales if it holds at this level through December.
States in dire need of increased sales tax revenues will not consider flat sales a welcome event, nor will retail stores in light of store hiring plans and rising inventories. Moreover, I rather doubt weak outcomes are priced into the stock market.
Perhaps there is some small nominal rise in Christmas spending, but a collapse cannot be ruled out yet either, especially if unemployment benefits are not extended once again.
Mike “Mish” Shedlock
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