Election Worries Explain Weaker Spending Confidence

Election-related worries likely are why consumers’ confidence to spend declined in September—especially among discretionary goods. Electronics and drugs/HBA were the only exceptions.

The decline in Spending Confidence comes on the heels of 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 rose to the highest level in August (24.1%) since the financial crisis unfolded in the Fall of 2008. The number leveled off in September (22.1%), but remains well above lows reached last year.
  • The spike in political worries—especially through the convention months—has coincided with a slowdown in retail sales (more here) as well as slippage in spending 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.

Spending Confidence shows:

  • Spending confidence trendsA month-to-month decline. Overall spending confidence declined in September to the most noticeable extent since May, when the job market was disrupted by the Verizon labor strike and weather-related issues.
  • Discretionary goods falloff. The falloff across discretionary goods—except for electronics—was most dramatic in leisure goods, homegoods, and eating out.
  • Consumable goods slippage. Confidence to spend in food and grocery edged lower in September. This continues the slippage evident since June, which is partly related to falling food prices (see latest price trends here).

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