According to the Prosper Consumer Spending Forecast, spending is up from last month and so is consumer confidence, but small business owners’ sentiment is down. Deborah Weinswig, Managing Director of Fung Global Retail & Technology, reports on which categories may benefit from an upswing in confidence and purchase intentions and what may have small business owners worried.
Sentiment rebounds somewhat from its Brexit-influenced low in July to a current 44.0% feeling confident or very confident in the U.S. economy, says the report. While on an upswing this month, August’s reading remains just below the 13-month average. Confidence among small business owners fell to 45.6%, compared to 50.3% last month.
“…this muted level of confidence heading into the fall elections is consistent with previous election years… commodity prices, access to credit, and interest rates… benign concerns in the near-term… health care costs and wages cause anxiety among small business owners…” Weinswig opined.
At 82.6, the August Consumer Spending Forecast for both discretionary items (+7%) and staples (+4%) is up from last month (78.4), and on par with last year (82.2) according to The Bureau of Economic Analysis. Personal income and spending data reveals a modest acceleration in real disposable income growth, and could be a harbinger of increased spending levels as the second half of 2016 progresses, says the report.
The Prosper Consumer Spending Forecast is an advanced predictive analytic derived from two established databases (the Bureau of Labor Statistics’ Consumer Expenditure Survey and Prosper’s Monthly Consumer Survey) and represents consumers’ intended spending levels over the next 90 days in 20 retail categories… an indicator of how much, or how little, consumers are living in the moment when it comes to their spending habits
At 2.87, the Prosper Impulsivity Score is relatively flat year-over-year (2.86) and up from last month (2.81). Weinswig commented, “… the sequential improvement in this metric is encouraging… relatively stable/slow growth… is creating a foundation for the next leg in consumer driven demand… “
At 104.3, The Consumer Mood Index is relatively flat compared to last month (104.6) and down from August 2015 (106.3). The report says that happiness highly correlates with consumer spending decisions, knowing that happier people buy houses and cars and are more likely to open their wallets.
The automotive outlook for the next 90 days is up 19% from July 2016 and down 1% from August 2015, says the report. Ford, Toyota and Honda are the top three brands being considered by people planning to buy a vehicle in the next six months.
“August… a time when consumers can get great deals on last year’s models,” Weinswig stated “…the large down payment required in an auto purchase depletes spending on other discretionary items for a few months for most American families… given that the year over year change in the Prosper Auto Outlook is for a modest decline, other areas of the retail economy could benefit…”
For the complete report, please visit here.