November 13, 2012
U.S. consumers' confidence level is at its highest since the beginning of the recession, projecting a strong holiday performance for retailers, according to Experian Marketing Services' Consumer Expectation Index.
The findings of the Consumer Expectation Index for the first half of 2012 show that the outlook for the holiday season is strong and there is a direct correlation between household income and economic optimism. The study also found that consumers are more confident in buying homes and cars compared to the past few years.
“We have seen consumer optimism increasing through the first half of 2012,” said Bill Tancer, general manager of global research at Experian Marketing Services, San Francisco.
“Consumer optimism has increased across all age groups and genders as well as the employed and unemployed, including adults planning to make a big-ticket purchase,” he said. “This positive trend should bode well for retailers this coming holiday season.
“The increase in optimism is even stronger for wealthier households, which should point to a positive holiday season.”
The Consumer Expectation Index is based on weekly results from the Experian Simmons National Consumer Study for which 25,000 adults are surveyed annually.
The survey covers 60,000 data elements, which include in-depth demographics, consumer behavior and brand preferences and more than 600 psychographics, attitudes and lifestyle measures.
Each demographic of adults surveyed is given a numerical score. A higher score equates to a higher level of confidence.
The Consumer Expectation Index figures indicate the potential for a strong holiday season for retailers.
The data from the week of Sept. 3 – the most recent week with available data – was higher than it was at the same week last year. It was also higher than it has been heading into the holiday season since 2008.
Overall, Consumer Expectation Index data for all adults shows a 1 percent increase from 2011 to 2012.
Furthermore, the online data shows a 2 percent increase in consumer confidence from 2011 to 2012. This could aid in holiday purchases.
Consumer confidence regarding big purchases has also increased, which could play a role in holiday shopping.
Consumer expectations regarding spending on big purchases increased by 8 percent between 2011 and the first half of 2012. This figure increased approximately 16 percent from 2008.
The increased confidence in big-ticket spending could also have an impact for retailers this holiday season.
“There is a direct positive correlation between income and economic optimism, with households earning over $150,000 per year reporting higher consumer optimism compared to households earning less," Mr. Tancer said.
Also, the study found that consumers have more confidence in buying a new home or new car.
The data from the first half of 2012 showed that consumers who are planning to buy a new home within the year have more confidence than they did in previous years.
New home buyers’ confidence increased 3 percent between 2011 and 2012.
Similarly, consumer confidence among those looking to buy a new car was 5 percent higher in 2012 than in 2011.
However, the study found that the wealthy and big-purchasers were not the only group to maintain consumer optimism.
Temporarily unemployed consumers showed no change in confidence between 2011 and 2012. However, this group's confidence did increase approximately 8 percent from 2008.
“Despite the negative economic news in the press, consumer confidence has maintained optimism, even among the unemployed,” Mr. Tancer said.
Erin Shea, editorial assistant on Luxury Daily, New York