Signs of improvement in consumer spending will be short lived if the latest measures of spending confidence tell us something about the outlook.
Confidence to spend over the next 90 days was flat in June among Millennials and Gen X households. As key shoppers in many spending categories, Millennials and Gen X will put a chill on recent positive signs in retail sales (see post here).
The flashes of stronger second-quarter spending are no doubt driven by Boomers—whose confidence to spend stayed on a hot streak through June. That Boomer confidence, however, has not translated into spending with any certainty.
These differences in spending confidence by generation have various implications for spending by category:
- Clothing, electronics, leisure goods. These categories are most at risk of weakness going forward, largely because of weak confidence to spend among Millennials. (Leisure goods include sporting goods, toys, music and videos.)
- Homegoods. Spending on home-related goods will be mixed with Gen X (primarily) and Boomers (secondarily) generating some opportunity. Millennials’ spending plans remain weak in these categories.
- Health & beauty. Healthy Millennial and Gen X spending plans in the HBA category make it one of the strongest categories for potential growth in the near term.
- Food & grocery. Relatively healthy plans to spend on food and grocery categories are skewed toward older households—Boomers and the Silent Generation. Their price sensitivity will tend to dampen the spending opportunity as a result.
These are among the takeaways from data through June 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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