US consumers cut spending levels

14 April 2009

PRINCETON: Consumer spending in the US declined by 27% in March on an annual basis according to Gallup, which also reports that popular sentiment fell 4% year-on-year, although both of these figures marked an improvement on the corresponding totals from the first two months of 2009.

The company surveyed a representative sample of 12,000 adults from across the US, and found that the slide in spending in March compared with drop offs reaching 34% in January and 40% in February.

Consumer sentiment also bettered declines of 71% and 53% in the first two months of the year, and Gallup's Consumer Mood Index now stands at –98, an improvement of 15% month-on-month.

Some 23% of respondents said the economic climate was more favourable, up from 16% last month and 10% in the year-ago period, while 59% argued the situation was "poor", compared with 39% in March last year, but down from 61% in February 2009.

Gallup also found that 22% of "upper-income" Americans – namely, those earning over $90,000 a year – think the economic outlook is getting better, while 56% rated it as "poor", up 26% year-on-year.

The Consumer Mood Index stood at –100 among this group, a double-digit improvement compared with February, but still down by 21 points on March 2008.

Average spending levels across retail, online, restaurants and on petrol fell to a new low of $59 (€45; £40) a day last month, down $5 a day on February, and by over a quarter year-on-year.

Upper-income consumers spent $107 each day during the month, the smallest total since GfK began tracking figures 15 months ago, and down 12% from February, but by just 3% on the year-ago period.

As the decline in consumer spending "moderated substantially" in March, Gallup argues there are signs "the downturn in the economy is bottoming out."

Data sourced from Adweek; additional content by WARC staff