Rising fuel prices, job losses and war fears will hit US consumer spending, judging by a new survey from NPD Group.
The New York-based market research agency surveyed 2,645 people at the start of the month. Of these, 41% intend to rein-in spending between now and May. Just 14% plan to raise expenditure, while 45% will keep their outlay about the same.
The findings suggest that the long-resilient American consumer may be starting to feel the strain. In NPD’s last survey in October, just 19% of respondents said they would reduce their spending, while only 14% gave this answer in March 2002.
“The consumer has been holding up the economy, but that pillar is about to start losing some of its strength,” declared NPD analyst Marshal Cohen. As war looms, he continued, “The consumer is not going to be thinking about going to the mall … the consumer is going to be glued to the media.”
Interestingly, Americans seemed more concerned by domestic troubles rather than the international crisis. Rising gasoline prices were cited by 46% of respondents as a factor affecting expenditure, followed by the poor job market on 45%. In contrast, the threat of war was mentioned by 24% and terrorism fears by 13% (though these factors may be more prominent now than when the research was conducted).
Consumers are likely to focus their cut-backs on big-ticket items such as major appliances, electronics and jewellery. Less expensive products are not as likely to suffer.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff