Future Spending Index: Consumers Poised to Spend i
Columbus, OH, June 2, 2006--After tapping the brakes in May, consumers are signaling they intend to spend at a faster pace in June according to Retail Forward's Future Spending Index. The index improved to a 101.3 level for June compared with May's 95.9 reading.
"At least in the near term, the pressures of elevated gasoline prices and rising interest rates won't be enough to send shoppers scurrying for the exits," said Steve Spiwak, an economist with Retail Forward. "Across income segments, this month's results suggest that as long as jobs and incomes are growing, consumers will continue to find ways to adapt."
In fact, this month's ShopperScape results indicate that the effects of high gasoline prices on consumer spending have eased somewhat since last fall. This may be good news for Father's Day, though most shoppers say they intend to spend the same this year on gifts for Dad.
In June, the Future Spending Index increased from with the prior month for each of the key income segments. An improved job outlook, easier debt loads and a pick up in home buying were common themes across income groups.
The index for Middle Market households (incomes between $22,500 and $75,000), which account for nearly half of overall spending, rose to 102.6 for June compared with 97.3 in May. The main reason was that assessments of job security logged a strong rebound from May's falloff. Also, consumer and mortgage debts have become easier to shoulder while home buying in this segment improved.
Down Market households (incomes less than $22,500) posted the strongest improvement among the three income segments. The index for this group increased from 98.9 in May to 106.4 in June. As with Middle Market households, Down Market spending prospects are being buoyed by better job security, lighter debt burdens and a modest improvement in home buying.
More optimistic views of job and income growth and debts along with an improvement in home buying bolstered the outlook for Up Market households (incomes greater than $75,000), whose index increased to 97.9 in June from 93.3 in May. The outlook was dampened somewhat by concerns about recent investment performance.
Compared with last fall, the pressure of rising gas prices has eased according to ShopperScape results. This is due in part to incomes that are rising at a solid clip, leaving enough cash to fuel other spending after filling up the tank. Moreover, consumers likely are finding ways to cope with increases at the pump other than by curbing spending, such as carpooling and coordinating shopping trips.
Overall, 62% of all shoppers are spending much or somewhat less due to the increase in gas prices. This compares to 67% in October 2005, a five percentage point decline.
The increase in gas prices has hit Down Market Shoppers the hardest. Three-quarters (75%) of all Down Market Shoppers have cut back their overall spending because of rising gas prices, down slightly from 77% in October.
The combined percentage of Middle Market shoppers who are spending much or somewhat less due to the increase in gas prices (70%) held steady compared with October. The proportion of Up Market Shoppers who have restrained their overall spending because of rising fuel prices slipped significantly, from 57% to 48% in October and May respectively.
