Election Worries Keeping Lid on Spending Confidence

Election-related worries continued to dampen consumers’ confidence to spend in October—especially in homegoods and leisure goods such as toys and sporting goods.

The signs of ebbing Spending Confidence™ have followed a rise in the percentage of consumers that say they “worry more about political and national security issues,” according to data from Prosper Insights and Analytics™.

That percentage edged higher in October, although it remains slightly below the recent peak (24.1%) reached during the August convention period. The recent levels are the highest since the financial crisis unfolded in the Fall of 2008 and well above lows reached last year.

The spike in political worries and the slippage in spending confidence have coincided with a slowdown in retail sales (more here).

Spending Confidence shows:

  • Spending confidence trendsA month-to-month uptick. Overall spending confidence edged insignificantly higher in October, which was driven entirely by an uptick in confidence to spend on consumable goods.
  • Consumable goods uptick. Consumable goods confidence ticked higher in both the food & grocery and health & beauty categories. This contrasts with confidence to spend at restaurants, which slipped for a fourth straight month.
  • Discretionary goods flat. Confidence to spend on discretionary goods was flat overall, but the underlying numbers show declines in homegoods and leisure goods. Electronics and clothing edged higher. The weak October for discretionary goods follows a significant decline the prior month.

See the scorecard for a summary of the confidence measures and a comparison to the other more widely followed measures of confidence.

The Spending Confidence Index™ and its components are measures of consumer sentiment created by MacroSavvy™ in partnership with Prosper Insights & Analytics™. The white paper at this link explains why the new index is an improvement over existing measures of confidence.

The latest data on confidence/sentiment from the Conference Board and the University of Michigan show a mix of components moving in opposing directions on a month-to-month and year-to-year basis—which is a stark contrast to the clearer picture from the spending confidence measures.

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