War Wories Cloud America’s Hopes for Nation but not Their Personal Finances
Posted December 22, 2009War Worries
The percent of consumers who spontaneously name “war/foreign affairs” as the major nation problem facing the nation more than quadruples as it jumps from 4% to 5% in the five months ending November to 23% in December.
A broad majority of Americans (58%) see “things going worse for the country” – more than in any month since March 2008.
Nation’s Economy
The percent of Americans who see the economy getting better ticks down from 48% to 47% between November and December, while those seeing it getting worse stand at 42% in December – just a tick under the highest levels seen in the past ten months.
Personal Finances
In the face of worries about the nation, The Consumer Balance Index (CBI) which tracks consumer perception of the balance between their assets and income versus debt and spending obligations, jumps from 78 in November to 81 in December, the highest index since June 2008.
Political Fall Out
The percent of Americans pleased with Obama’s performance as President continues to fall, from 52% in September to 48% in October, 47% in November, and a low of 45% in December.
Despite shrinking public approval of Obama, the percent of Americans who lean Democratic ticks up from 40% in November to 41% in December, and the percent who lean Republican ticks up from 36% in November to 37% in December. The balancing difference is a two-point decrease in the percent of Americans voicing no political leanings.
Consumer Spending
Consumer spending trends in December are decidedly mixed.
The percent of consumers willing to spend freely for food, clothing and medical services increases eight points, from an index of 72 in November to 80 in December, which is the highest index since February 2008.
In sharp contrast, active shopping for new cars, housing and other big ticket items declines by twelve points, from an Index of 105 in November to an Index of 93 in December.
Consumer Financial Balances Versus Willingness to Spend Freely: October, November, December (1,500 telephone interviews conducted at the rate of approximately 503 a month in the three months ending December 2009)
| Consumer Balance Index | |||||
| Oct 2009 |
Nov 2009 |
Dec 2009 |
Diff. Oct-Nov |
Diff. Nov-Dec |
|
| CONSUMER BALANCE INDEX (CBI) | 79 | 78 | 81 | -1 | +3 |
| Willingness to Spend Freely for Consumables: | |||||
| INDEX | 77 | 72 | 80 | -5 | +8 |
| PERCENTS | |||||
| Food | 40% | 37% | 43% | -3 | +6 |
| Clothing | 34% | 29% | 36% | -5 | +7 |
| Gasoline | 42% | 42% | 46% | 0 | +4 |
| Medical Services | 69% | 65% | 68% | -5 | +4 |
| Active Shopping for Major Goods Index | 96 | 99 | 105 | +3 | +6 |
| Percent Actively Shopping For… | |||||
| New Car | 3% | 5% | 6% | +2 | +1 |
| Used Car | 7% | 9% | 6% | +2 | -3 |
| House | 5% | 5% | 6% | 0 | +1 |
| Furniture | 10% | 11% | 8% | +1 | -3 |
| Personal Computers | 9% | 10% | 9% | +1 | -1 |
| Major Appliances | 8% | 8% | 9% | 0 | +1 |
| New Carpeting | 3% | 3% | 3% | 0 | 0 |
| Color TV | 9% | 9% | 10% | 0 | +1 |
| Air Travel | 21% | 18% | 14% | -3 | -4 |
| Overnight Hotel/Motel | 20% | 20% | 16% | 0 | -4 |
Consumers with the greatest propensity to buy big ticket items are concentrated among those with the “Strongest” balances – the highest CBI Index.
The decrease in the percent of consumers actively shopping for cars, housing and other big ticket items, reflects a down tick in the percent of consumers with the “Strongest” balances - from 19% to 18% - which reduces the number of consumers who are prime prospects for big ticket spending.
By contrast, consumers with the greatest propensity to cut back – not spend freely – on food, clothing and other consumables are concentrated among consumers with the “Weakest” financial balances – the lowest CBI Index.
The increase in consumer propensity to spend freely for food, clothing and other consumables reflects a four point reduction, from18% to 14%, in percent of consumers who cut back harshly on day to day spending.
The balancing difference is a gain of five points in the percent of consumers with financial balances that are neither extremely strong nor extremely weak.
Holiday Spending
Spending on Christmas gifts in 2009 is likely to approximate spending in 2008. As of early December, the percent planning to spend more this Christmas than last ticks up from 8% in 2008 to 9% in 2009, while the percent planning to spend less also ticks up from 64% in 2008 to 65% in 2009.
The balancing difference is a two-point decline in the percent planning to spend the same, from 28% in 2008 to 26% in 2009.
Savings
Despite the improvement in their financial balances, consumers are aggressive about increasing their savings. The percent of consumers reporting they had money left over for savings at the end of the month increases five percentage points from 36% in November to 41% in December. The percent who expect their total savings to increase in the coming twelve months is up four points, from 33% in November to 37% in December.
Uncertainty triggered by worries about war and concern about the way things are going for the nation may be at the root of consumer’s urgent effort to increase their savings.
Investor Willingness to Buy Stocks
The ratio of prospective buyers to sellers of stock in the event of a ten percent decline in the Dow changes from a positive 1.44 buyers for each seller in November to a negative of only 0.77 buyers for each seller in December.
Comment
The Consumer Balance Index (CBI) is unique in three respects. It is the only monthly economic index that:
- Builds on the theory that consumers constantly and aggressively adjust their spending to maintain a favorable financial balance between their assets and income versus their debt and spending obligations
- Utilizes information about individual consumers, permitting analysis of changes in the distribution, as well as change in the financial balance of the “average” consumer
- Focuses on reporting on the events likely to be featured in next month’s press rather than predict what will actually happen in the coming month
TO ASK QUESTIONS request detailed data, make suggestions or offer your projections of the future, phone Leo J. Shapiro, CEO, SAGE: Survival and Growth Enterprises LLC. He can be reached in Tucson at 520-878-0188.
Copyright December 2009 by Leo J. Shapiro – All Rights Reserved.