Consumers' easing concern about job security offers hope

by Bryan Salvage
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PORT WASHINGTON, N.Y. — Consumer attitudes toward the economy and intentions to shop are at their lowest point since October, according to new information from the NPD Group Inc., a leading market research company. Consumers’ concern for job security, however, appears to be leveling off, which could mean they are preparing to spend again. These findings were released in NPD’s Economy Tracker, a monthly report on consumer attitudes and spending intentions.

The Economy Tracker measures consumer concerns regarding the economy on a scale between 0 and 100, with 0 being "Very Concerned" and 100 being "Very Confident." In February, the Economy Tracker’s General Economic Perception indicator fell to 36.7, from 38 in October. Outside of a slight lift in January, the indicator has moved steadily downward since October, the first month of reporting.

A decline in consumer shopping intentions mirrored consumer concerns about the economy. The Economy Tracker’s Retail Response Indicator measures consumer spending intentions on a 0 to 100 scale, with 0 representing "Reduce or Spend Less" and 100 representing "Spend More."

The Retail Response Indicator dropped more than 2 points to 35.4 in February.

"One important thing to note here is that the 2-point drop in how consumers feel about the economy, in general, translates to a 5-point drop in what consumers’ purchase intentions are," said Marshal Cohen, chief industry analyst, The NPD Group Inc. "And while a 5-point drop doesn’t seem like much, it represents millions of dollars."

Despite consumers’ fading confidence regarding the economy, in general, NPD found evidence of a potentially positive sign in the leveling off of consumers’ concern regarding job security.

"Of all the data I look at, this measure provides one of the best indications of how consumers are going to behave," Mr. Cohen said. "February’s results show consumers feeling better on this front and could signal consumer stabilization, a point at which consumers catch their breath, reassess and prioritize their purchase needs in preparation to begin spending again. Stabilization is a pre-cursor to growth.

"While, I think it’s premature to talk ‘recovery,’ I think if we are able to spot signs of stabilization, we’ll be better positioned for recovery and then the return to growth," he added.

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