According to Prosper Insights and Analytics, consumer confidence slipped a bit in July compared to the previous month, and the focus on pragmatic spending and emphasis on limiting expenditures to necessities picked up. The trends could impact back-to-school spending.
The percentage of consumers polled confident of the chances for a strong economy was 39.6%, down 1.0 compared to June. Prosper said this is an improvement over 2008 but that the economy has yet to re-attain pre-2008 confidence levels.
Focusing on necessities has become a guiding principal for 55% of respondents, an increase over a series of months when the number fluttered around the halfway point.
The least confident age demographics were the those just beginning their adult lives, the18-24 group; and those nearing the end of their participation in the workforce, the 45-54 group.
As for the upcoming special spending season, Prosper said, “Headed into the Back-to-School season, expect shoppers to stick to budgets, conduct of price comparisons, watch for sales, and continue to clip coupons – any smart shopping strategy to save a few dollars.”
RBR-TVBR observation: Ever since the economic implosion in the Fall of 2008, it has been speculated that consumer behavior may have changed for the long term. At first, it became common practice to pinch pennies and avoid the use of credit – indeed, it often became difficult to acquire credit, much less use it.
The thing is, as Benjamin Franklin noted around the birth of this great nation, frugal household financial practices are their own reward, and consumers who were suddenly forced to adopt such practices learned that they can live very comfortably without tossing every spare penny at whatever whim strikes their fancy. And of course, by reducing interest payments and increasing savings, consumers are much better able to deal with the unexpected and generally benefit from a feeling of greater security.
The unfortunate side effect of all this is that reduced spending curtails the ability of the economy to fully recover.
As a result, we are seeing a great deal of positive economic analysis, but the improvements have been modest. This particular report shows a slight dip in the road to recovery, and as always, we’ll be watching to see if its results are confirmed by other measurements.