As we head closer to the holiday peak, are US shoppers ready to spend? So far this year, retail sales growth trends have been inconsistent, with weakness in several months balanced by strength in others. At Prosper, each month we survey 7500 consumers on sentiment, behavior and preferences. Like retail sales, our key confidence metric has seesawed month by month this year.
In order to make more sense of these up and down metrics, I asked Deb Weinswig and her team at Coresight Research to analyze Prosper’s October data particularly on consumer sentiment and future purchase intentions and identify any trends that may be forming. Here is what they found.
In October, US consumer confidence levels were up month over month, with the proportion of all consumers being confident or very confident in the economy standing at 50.7% versus 49.7% in September. However, that improvement followed two months of confidence declines, and affluent consumers—those with household incomes of more than $150,000—registered a further month-over-month slowdown in confidence in October.
Over the medium term, the picture is mixed. Confidence levels have zig-zagged so far this year—but compared to January’s trough, consumer sentiment is up. And that recovery has been led by more affluent households. Versus January, confidence levels in October were up 2.1 percentage points for all adults but were up 3.8 points for those with a household income of over $100,000 and up 5.3 points for those with an income of over $150,000.
We chart the pattern in total retail sales below.
Deborah Weinswig, CEO Coresight Research, says, “The economic context for US consumers is generally benign—but there are pockets of macro uncertainty and this appears to have weighed on consumers. Retail sales growth has strengthened recently, but the previous inconsistency in retail demand and upward pressures on costs, particularly from increased tariffs on certain imports from China, may prompt some caution among retailers.”
Prosper’s October data shows that a recovery in confidence in the stock market has contributed to the overall uptick in sentiment among affluent shoppers—although that stock-market confidence tended to falter in September and October. Compared to January, willingness to invest in the stock market in October was up 1.9 percentage points for all adults, 3.0 points for $100,000+ and 2.3 points for $150,000+.
So, how does this translate into willingness to spend? Below, we compare the percentage-point change in major purchase plans between January and October. It’s worth noting that some purchase categories, notably vacations, are more seasonal—and the most interesting comparisons are between the income groups, rather than the overall change.
Those with incomes over $100,000 have registered a greater-than-average increase in spending intent for the furniture, home appliance, house and jewelry/watch categories. Those with incomes over $150,000 have outpaced the average on plans to spend on home appliances, major home improvements, house purchases and jewelry or watches. Affluent shoppers’ willingness to spend on big-ticket categories is a positive, despite the inconsistent retail context: Worried consumers are most likely to cut back on big-ticket discretionary categories.