IDEX Online Research: Holiday Spending - U.S. Consumer Optimism Improves

What a difference a month makes.  On the heels of hurricanes Katrina and Rita, U.S. merchants were worried about the possibility of weak consumer spending trends during the upcoming all-important holiday selling season.  New research shows that these concerns appear to be ill-founded.  Only 20 percent of all American consumers say these hurricanes will have any impact on their holiday spending, according to Retail Forward, the global consultant for retailers. 

In its U.S. Holiday Sales Forecast, IDEX Online Research pointed out that “shocks to the system” such as hurricanes, terrorist events, and aberrations tend to have only a transitory impact on consumer sentiment and shoppers’ spending.  That is, after a few months, consumers tend to forget about these events, and they move on with their lives.  Usually, consumer spending levels are back to normal within six months of a major “system shock.”

New consumer research from Retail Forward confirms the transitory nature of the impact of the hurricanes on projected consumer spending patterns in the November and December holiday selling period.  Even though only thirty days elapsed between research surveys (late September vs late October), Retail Forward discovered that “. . . the latest survey suggests that the initial shock of Hurricanes Katrina and Rita on shoppers’ moods is quickly giving way to more optimism as it becomes clearer that the storms likely won’t have a large impact on jobs and incomes outside of the affected areas.”  Thus, Retail Forward continued, consumers will have both the ability and the inclination to spend during the holiday selling period. 

The table below summarizes the results of Retail Forward’s new research.  In September, 42 percent of shoppers reported that the hurricanes would have a significant affect on their holiday spending.  A month later, data indicates that this percentage has dropped by more than half to about 20 percent.  Conversely, the percentage of shoppers reporting that the hurricanes would not affect their holiday spending more than doubled in the short span of a month.  

Further, Retail Forward noted, “The fading impact of this year’s hurricanes means that fewer shoppers now plan to reduce their spending on key spending categories.”  The table below illustrates the potential impact of the hurricanes on consumer spending by major retail category.  Jewelry expenditures would most likely be included in “clothing, shoes, and accessories” though some analysts might classify jewelry as a big-ticket discretionary item such as consumer electronics.  Either way, only about 7 percent of all consumers say the hurricanes may affect their spending in those categories.  A whopping 69 percent of all U.S. consumers said that the hurricanes would have no impact on their holiday spending.