Consumer Intentions & Actions – June 2011
This month, I will be reviewing the latest big insights on confidence, employment, practicality, fluctuating gas prices, and the 90 Day Outlook.
The June Consumer Intentions & Actions survey was collected June 1st through the 8th and includes the thoughts of more than 8300 consumers on topics such as:
- Consumer Confidence;
- The Employment Environment;
- Pragmatic Shoppers;
- The Effects of Escalating Pump Prices;
- 90 day purchase plans.
First up is consumer confidence, a key indicator of consumer’s overall mood and how willing they are to spend. And, we’ll take a look at this data over two different time periods.
The chart above displays a 13 month snapshot of those who are very confident or confident. As you can see, confidence continues on the downward slope begun in February, with 27.8% who are currently confident or very confident in the economy. We’re drawing closer to the 13 month low, which was in December at 27.3%, and we’re more than four points below the year’s high recorded in January. As you can see, this month’s reading is also a few points shy of where we were one year ago.
Let’s continue to compare this month’s data to years past.
For the past three years, confidence has been fluctuating in the 27 to 30% range, so our current level is quite unspectacular. While this reading shows definite improvement from June 08’s 18.8% disaster, we are nowhere near the 40% levels recorded four years ago and prior.
And, you probably noticed that dip in confidence back in June 2006, at 35.9%. Back then we attributed this decline in confidence to record low approval ratings for President Bush, rising gas prices, and continued conflict overseas. While we have elected a new Commander in Chief, these woes don’t sound unfamiliar today. Even in a slump, that 2006 reading looks enviably higher than what we’re faced with this month.
Now, let’s move on to the Employment Outlook, which will likely shed some light on why consumer sentiment continues to falter.
The yellow sticky notes on this chart represent the U.S. unemployment rate for the previous month to each corresponding time period. So, for June 2011, 9.1% is the official unemployment rate for May, the latest information available. The question we’re asking consumers here is whether they think there will be more, the same, or fewer layoffs over the next 6 months.
As you can see, while unemployment is down slightly, attitude towards the job market didn’t fluctuate accordingly. In fact, it became slightly more pessimistic, with fewer consumers expecting declines in pink slips. In Jun-10, this figure was 19.2%, while now it’s 17.4%. And you can see this data shaded in green on the chart. There’s no denying that things certainly look more positive compared to recession-addled Jun-08 and -09. While the latest figure on unemployment was only 5.4% back in Jun-08, three in five consumers were expecting “more” layoffs – that dark blue shaded area. Back to present, while “only” 28% of consumers are expecting more layoffs, more than half indicate that layoff levels will remain the same.
So what’s the moral of the story here? With an unemployment rate of 9.1%, more than 80% of the population is expecting “more” or the “same” number of layoffs than at present. And this pessimism is killing confidence.
Stay tuned later this week for practicality in purchasing, pain at the pump from rising gas prices and future purchasing plans.