Spending confidence sagged amid tax reform debate

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Spending confidence sagged in December amid uncertainty about tax reform effects—especially among Gen X and Boomer households, who make up the bulk of affected tax payers.

Millennials were the encouraging exception. Their confidence to spend over the next 90 days continued to rebound from a June low point reached after sliding steadily through the 2016 presidential election.

The December drag on confidence may prove a temporary setback like September’s post-hurricane impact. If so, then the otherwise healthy trend may still yield a good start to spending in the New Year.

Meanwhile, the spending trend will continue to be marked by generational differences by category—even as e-commerce is favored over spending at stores:

  • Health & beauty. The weakest confidence to spend in December was found in the health and beauty category and it was especially weak in a key generation. See the report below for more.
  • Clothing. Clothing also took a big hit to confidence to spend in December, which was focused in two important generational groups. See report below for more.
  • Food & grocery. This category benefited from a sizeable boost in confidence to spend in a key generation in December—although overall category spending confidence barely held steady. See the report below for more.
  • Homegoods. Confidence to spend on homegoods in December diverged between stronger confidence among one key group and weaker confidence among another. See the report below for more.
  • Electronics. Electronics remains the strongest category compared with a year ago in terms of confidence to spend, although the month-to-month change was mixed in December. For more, see the report below.
  • Leisure goods. Confidence to spend on these goods—including sporting goods, toys, music, and videos—saw a big drop among a key generation in December. See the report below for more.

These are among the takeaways from data through December from the Spending Confidence Index™, which is the proprietary index of consumer sentiment created by MacroSavvy™ based on data from Prosper Insights and Analytics™.

For more background about the Spending Confidence Index™ and its components, the white paper at this link explains why the new index is an improvement over existing measures of confidence.

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