Heading into the holiday season, consumers are growing more anxious over the economy's precarious position and are increasingly less confident that the government can do anything to change it.
According to The NPD Group's monthly Economy Tracker survey, two-thirds of U.S. consumers believe the U.S. is headed for bad times (with 59% saying it was headed toward recession), and that those bad times are going to last indefinitely. In addition, only 12% of consumers polled in August felt the U.S. government could do anything to straighten things out. That sentiment is the lowest since the Tracker survey began in 2008, when 25% of consumers felt the government could solve the country's economic woes.
"It's been said that this is a recession of confidence," NPD senior vice president of retail insights Dee Warmath tells Marketing Daily. "We heard that loud and clear from the consumers we surveyed in August. They felt that not only are the bad times here but they are here to stay. If nothing dramatic happens to turn things around in a more positive direction -- or even the promise of things improving -- heading into this year's holiday shopping season, consumers will hold back on their holiday spending."
At the same time, consumers are concerned about their own personal economics as well. According to the August survey, 66% of consumers said they "worry more" about their economic situation, down slightly from 62% in July. In addition, only 12% see the current economics as holding great potential or promise, again the lowest percentage since the survey began in 2008.
Accordingly, consumers dialed back on their own spending expectations in August, with 47% saying they planned to cut back spending over the next few months, up from 42% who felt the same way in July and during August 2010.
"August was a particularly tumultuous month," Warmath says. "Consumers were hit with bad news and turmoil at every turn. Since consumer sentiment is a reflection of the times, it's not particularly surprising that the majority of U.S. consumers believe that the U.S. economy is headed for bad times. I do, however, feel that consumers are looking for that glimmer of hope and if there is any improvement, great or small, confidence will improve."