Bifurcation: Consumer Confidence Down; Affluent Households Spending

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According to third quarter global online consumer confidence findings from Nielsen, consumers around the world are more sensitive than ever regarding their future spending budgets.

Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, says that “Third quarter was volatile and challenging for global economies and financial markets amid stagnant U.S. unemployment figures... a recessionary mindset is... up four percentage points from last quarter and seven points from the start of the year... the result is continued spending restraint for discretionary expenses... “

For the first time, Nielsen asked global respondents how they allocate their monthly budget and where they would increase or decrease spending if their budget expanded or contracted by 10%.

Dr. Bala continued “...there is a sense of weariness and pent-up desire for a respite; when households contemplate a 10%increase in budget, we see a desire to expand allocation to indulgent categories like ‘pleasure travel/vacations’ (+29%) and ‘recreation and entertainment’ (+20%). There is also a sense of economic uncertainty and a need for a safety net, so consumers also add to their ‘savings/investments’ (+25%).”

On the flip side, when budgets are reduced by 10%, discretionary spend is reduced. Consumers also indicated a spending cut back on ‘electronics and appliances. Bala opines that if the global economic climate worsens, these three sectors appear to be particularly vulnerable. In the event of having to make do with a smaller budget, respondents also indicated a reduction in savings/investment by 10%.

                        For additional information and to access the complete report, please visit Nielsen here.

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0 comments on "Bifurcation: Consumer Confidence Down; Affluent Households Spending".

1. Fj Rich from EPI
   

   commented on: November 18, 2011 at 7:11 a.m.
   I'm a big fan of these research reports; this one is poor research and sends an uninformed message. We all know that what people "say" and "do" are often very different. In the last 4 years consumer spending has dropped only 2% across all household purchases. The affluent may be keeping pace while the less affluent are falling away, but results are results. Research is meant to inform, but its conclusions always deserve perspective.

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