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This month’s consumer spending outlook continues to show improvement, recording one of the best monthly readings since the 2008-09 recession.

This report represents the findings of an April 2019 survey of 1,284 primarily North American respondents from 451 Alliance’s Leading Indicator panel focused on consumer spending plans for the next 90 days, as well as consumer sentiment and expectations.

 
 

Overall Consumer Spending

 
 

Consumer spending momentum has improved for three months in a row after starting the year on a sharply weaker note. We found 32% of respondents plan to spend more over the next 90 days, with 18% saying less. These results are better in comparison to last month and last year.

 
 
Overall Consumer Spending
 
 

Importantly, the improvement in spending is occurring across both higher and lower income households – though a bigger jump is seen among the former.

The increasingly positive spending environment can be partially attributed to seasonal factors including upticks in travel and home improvements, as well as personal finances and consumer confidence.

 
 

Consumer Expectations and Confidence

 
 

Expectations for the economy and investor sentiment, which are both signaling further improvement, are having a positive influence on spending.

Consumer Expectations. Consumer expectations for the overall direction of the economy are better than last month, with 27% of respondents saying they expect the economy to improve over the next 90 days while 14% say they expect it to worsen. These findings represent a huge 19-point improvement over April 2018.

 
 
Consumer Expectations
 
 

Stock Market Confidence. Confidence in the US stock market is almost back to positive territory – which is relatively rare for this metric – with 26% of respondents saying they are less confident in the US stock market compared to 25% who are more confident – a stunning 59-point improvement since December 2018.

 
 
Consumer Confidence in US Stock Market
 
 

Clearly, consumers are feeling better about the economy and stock market. This directly translates to the better spending environment we’ve been reporting since January.

 
 

Spending Categories

 
 

A nearly across-the-board improvement is seen this month in the consumer spending categories we track, with travel/vacation (+3) and household repairs/improvements (+2) leading the way compared to March.

 
 
Consumer Spending Categories
 
 

Again, much of this is due to seasonal factors such as the oncoming of warmer weather and planning for summer vacations. Still, it’s a healthy sign that increased spending is positively impacting multiple areas.

 
 

Reasons For Spending

 
 

Spending Less. Reduced income (32%) remains the top reason consumers cite for spending less money over the next 90 days, but it has improved 3-points since last month. Reducing debt (29%; down 2-points) and saving more money (29%; up 4-points) are next.

The combination of these three reasons suggest that consumers are being pragmatic in the handling of their personal finances. In this better economic environment, consumers appear more comfortable balancing the trade-offs between debt reduction and savings.

 
 
Reasons for Spending Less
 
 

Spending More. We asked respondents who said they planned on spending more over the next 90 days a similar question about the factors driving their decisions. Two of the reasons given are having a direct impact on other results in the survey.

Home improvement expenses (41%; up 4-points) relate directly to the overall improvement we are seeing for this category in the survey. As shown above, home improvements is also one of the top reasons for spending less.

This dichotomy relates to last month’s report, where we highlighted the contrast essential vs. discretionary spending on home projects. We noted that the overall results can be a net positive or negative depending on how respondents classify their spending.

Improved returns on investments (11%; up 2-points) goes hand in hand with the rise in stock market confidence this month. When the value of equity holdings goes up, investors feel like they have more money to spend and their outlook for the economy as a whole generally improves.

 
 

Threats to Personal Finances

 
 

We asked respondents what macroeconomic forces - if any - were posing the greatest threat to their personal finances. Stock market performance (37%) remained the overall top choice, but that’s 10-points better than March and is yet another signal of the restored confidence in the stock market.

Trade war/tariffs (35%) moved up 4-points, but this could be a relative change resulting from the decrease in stock market performance and not a worsening impact from that specific issue. Of note is the increase in energy prices from 12% last month to 21% currently.

 
 
Threats to personal finances
 
 

A deeper look at the data, shows two areas that have a significantly greater impact on households with income over $125,000 vs. households under $125,000: trade war/tariffs (39% vs. 29%) and China economic slowdown (21% vs. 13%).

On the flipside, four areas are more adversely affect households with income under $125,000 vs. households over $125,000: energy prices (27% vs. 14%), inflation (16% vs. 11%), interest rates (16% vs. 12%) and environmental regulations (9% vs. 3%).

These findings continue to highlight how various forces in the economy disproportionately affect different groups of consumers and illustrate the fact that economic prosperity is not evenly distributed – no matter how good the overall economic numbers look.

 
 

Job Loss Worries

 
 

Respondents’ concerns about job loss continues to be remarkably steady. The results are in-line with last month and last year – with 36% of respondents saying they do not worry at all about someone in their family losing their job and only 15% saying they worry a great deal or quite a bit.

 
 
Job Loss Worries
 
 

Despite the wide swings in consumer spending momentum in recent years, this indicator has been the steadiest of all metrics we track. It reflects the stability in the job market, highlighting employment security, which is a major underpinning of overall consumer sentiment and expectations.

 
 

Retail Shopping

 
 

Despite commanding a lion’s share of retail spending, Amazon (81%) has managed to push their presence even higher with a 3-point uptick this month. More impressively, the April reading for Amazon represents an even bigger jump year-over-year – an extraordinary feat for an e-commerce player with such a dominant market share.

Costco (49%), Walmart (48%) and Home Deport (45%) are maintaining their perch as the top brick-and-mortar retailers.

 
 
Retailer Shopping
 
 

Taking a closer look at Amazon’s performance this month, the uptick from 78% to 81%, likely required the participation of new customers from different target audiences. Indeed, while our findings for Amazon show an increase among both higher and lower income households, the largest increase is among the latter group.

 
 
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This data suggests that lower income households are feeling more confident about their personal financial situations, as increased numbers of consumers are turning to Amazon for their vast selection, competitive prices and overall user experience.