The outlook for consumer spending in the coming months has brightened with a pickup in spending confidence led by Millennial and Gen X shoppers.
The confidence pickup among Millennials in July is particularly notable because their year-long weakness had been offsetting a post-election surge in overall spending confidence led by Boomers.
Combined with stronger spending sentiment among Gen X—which represents the largest spending generation—the improvement among Millennials bodes well for the outlook if sustained.
While the benefits of stronger confidence will favor e-commerce over store sales (see the related report here), the combined gains also will be skewed toward discretionary retail goods categories from clothing to sporting goods:
- Clothing, electronics, leisure goods. Confidence to spend in these categories saw the biggest month-to-month gains in July—led in part by their core younger shoppers. (Leisure goods include sporting goods, toys, music and videos.)
- Homegoods. Homegoods lagged in July in spending confidence, primarily among Boomers and Silent Generation shoppers. The isolated growth opportunity in homegoods is among Gen X shoppers, who registered a big increase in confidence to spend in the category.
- Health & beauty. While overall confidence to spend on health and beauty categories improved modestly, a strong pickup among Millennials in the category suggests they could be a targeted opportunity.
- Food & grocery. Food and grocery continue to lag other categories, held back partly by flat confidence to spend in the category among Boomers—for whom the category represents a disproportionate share of spending. Price sensitivity among core older shoppers will remain a drag on these categories.
These are among the takeaways from data through July from the Spending Confidence Index™, which is the proprietary index of consumer sentiment created by MacroSavvy™ based on data from Prosper Insights and Analytics™.
For more background about the Spending Confidence Index™ and its components, the white paper at this link explains why the new index is an improvement over existing measures of confidence.
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