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BigResearch: Consumer confidence flagging

Nicole Crews, Retail Editor 4, July 12, 2011

Columbus, Ohio - Still not secure about the country's economic state, many consumers in said they are not expecting to spend a lot on gifts this coming holiday, and have already cut back their spending on home décor and home furnishings items.

In its latest Consumer Intentions & Actions Survey (CIA), which was conducted July 1 to 6, consumer research firm BigResearch found that consumer confidence has dropped more than a point from June's 27.8%, "with 26.5% now very confident/confident in chances for a strong economy - the lowest reading in more than two years," when in April 2009 that rate was 26.0%.

"Waning confidence, high unemployment, war overseas, rising commodities/gas prices, a dull housing market, et al, appear to be contributing to fading optimism for an economic rebound," BigResearch added.

BigResearch's CIA is a monthly survey which that monitors more than 8,000 consumers to provide insights and identify opportunities in a fragmented and transitory marketplace.

In July, fewer than one in three - or 27.8% - said they believe the economy will bounce back to its pre-recession heyday, representing a 38% drop from the nearly half (44.6%) who felt the same way back in July 2009. More than a third (36.4%) said they doubt the resilience of the economy, rising 40% in two years' time, while an additional 35.8% just aren't sure about our economic future.

Without hope for an economic rebound, BigResearch warned consumer spending will likely not bounce back this summer - nor during the holidays.

Practicality in purchasing has increased, with the near-majority of consumers (49.9%) contending they strive for pragmatic purchases when in the store. That rate is up more than a point from the previous month (48.5%) and nearly as much from a year ago (49.1%).

More than half - 58.5% - said they stick to the necessities when shopping, versus 30 days ago when 55.2% said the same and July 2010's 58.0%.

"Sinking confidence and pragmatic spending inclinations are likely to blame for a depressed 90-day outlook for July," continued BigResearch, based on the findings from its recent Diffusion Index. It showed that all categories have declined from June, while most face downward from one year ago, "which might not bode well for the back-to-school selling season." Count home décor, home furniture, lawn & garden, and home improvement among the categories that were down.

Farther on the horizon, the holiday outlook is also looking to potentially be somewhat bleak. BigResearch said that in its "special sneak preview," it found one-third of consumers (32.4%) are already planning to spend less on gifts than they did last year (about the same as last year, 32.8%). One in four (26.5%) is budgeting the same amount (versus 28.3% in July 10), while just 4.1% intend to spend more, on par with 3.8% a year ago. To accomplish this, three in five (62.5%) said they plan to spend less on everyone this year - 43.5% will be scouting for gifts on sale, while a little more than a third (35.6%) will comparison shop for the best prices.