Consumers Say Their Spending Will Hold Steady in Wavering Economy
Sixty-Four Percent of Consumers Plan to Spend the Same or More over the Next Six Months
Despite economic ups-and-downs, the majority of Americans will continue to spend, according to the latest American Express Spending & Saving Tracker. The survey, conducted in the midst of news surrounding high unemployment rates, and unexpectedly robust retail sales, found that 21% of Americans plan to spend more, with 43% expecting to spend the same, in the next six months compared to the first half of 2011. This represents an increase of 6% and 4% respectively from 2010. Greater consumer spending will be lead by young professionals, with 41% intending to open their wallets wider for 2011 year-end purchases, an 18% increase from last year.
The majority of this discretionary spending over the next six months is expected to go to entertainment (91%), grooming (88%), clothing (86%) and electronics (67%). Forty-three percent of Americans also plan to make a large purchase by the end of the year, whether that is a TV (16%), automobile (15%), furniture (14%), end-of-year getaway (12%) or household appliance (10%). While most will spend an average of $1,800 on their most expensive purchase, affluent consumers expect to spend an average of $2,800 before the end of the year.
With greater consumer spending on the horizon, the survey found that the majority (69%) of employed Americans feels more or equal job stability this year compared to 2010. Additionally, more than two thirds of Americans say their financial outlook over the next six months is more or just as stable versus one year ago.
“Many consumers – especially those out of work – are facing very tough times,” said Pamela Codispoti, executive vice president and general manager, Consumer Card Services, American Express. “So it’s encouraging to see that those fortunate enough to be employed are experiencing feelings of greater job and financial security and are doing their part to stimulate the economy.”
Discretionary Spending: Where the Money Is Going
In terms of where consumers say they will spend over the next six months, entertainment ranks first followed by personal grooming, fall fashion and consumer electronics. Nine in ten Americans aren’t pinching pennies when it comes to having fun. Many will entertain themselves by:
• Dining out (65%)
• Watching TV or movies at home (via cable TV, Netflix, etc.) (62%)
• Enjoying wine, beer or other spirit (51%)
More than eight in ten Americans intend to smell good and enter the fall season with a new hairdo. The most popular planned personal grooming purchases are:
• Haircuts at the salon or barber (59%)
• Lotions and body creams (46%)
• Fragrance/cologne (28%)
Fall fashion purchases are also popular with more than eight in ten Americans planning to buy clothing or footwear in the next six months. The majority will head to department (44%) and discount stores (42%) to shop for fall fashion, in contrast to 27% who will shop online. Top purchases in the next six months include:
• Footwear (67%)
• Jeans (52%)
• Casual or weekend clothes (48%)
• Work attire (36%)
The survey reveals that the vast majority (93%) of young professionals are especially motivated to spend on fall fashion this year. Dressing for success is critical for this demographic as they look towards career advancement and many will buy clothes for work over the next six months (62%).
Finally, more than two thirds (67%) of consumers plan to make a technology purchase in the next six months. Topping these consumers’ shopping lists are:
• Computer/computer accessories (36%)
• Mobile/smart phone (34%)
• Video games/gaming device (21%)
A Small Price to Pay for Happiness?
When it comes to little luxuries, many consumers feel small expenditures, like lattes and lipsticks, act as a “pick-me-up” (23%) and many (67%) plan to splurge on these affordable luxuries, especially young professionals (89%). For women, that means splurging, even in a bad economy, on morning lattes (32%) or a new tube of lipstick or gloss (36%), while men will indulge in favorite beverages (37%) such as imported beer, as well as music and app downloads (17%).
While the majority of Americans are planning to spend more or the same over the next six months versus the last six months, those that plan to spend less (31%) are finding ways to cut back. Their top saving strategies include:
• Eating at home vs. dining out (81%)
• Making better use of the clothes in their closet (55%)
• Movie night at home instead of the theatre (46%)
• Purchasing less expensive beauty products (42%)
• Waiting longer between salon / barber visits (37%)
Most Americans redeem coupons in-store (68%) but some are taking advantage of the proliferation of online discount and coupon services to save money this year with 10% using most coupons online. The preferred place to go to look for discounts and coupons for favorite brands/stores is Groupon (15%) and Facebook (12%). More than a third of these consumers visit their preferred sources at least once daily to find discounts for their favorite brands and services.
American Express Spending & Saving Tracker research was completed online among a random sample of 2,009 consumers aged 18+. Interviewing was conducted by Echo Research between August 30 and September 3, 2011. Overall, the results have a margin of error of +/- 2.2 percentage points at the 95 percent level of confidence.
About American Express
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