Momentum in consumer spending as the year ended

On Jan. 15, Reuters announced that U.S. retail sales rose more than expected in December, suggesting momentum in consumer spending as the year ended.

According to the Commerce Department, retail sales increased 0.5 percent after a 0.4 percent rise in November. Economists polled by Reuters had expected sales to rise only 0.2 percent.

A survey conducted with RMG’s HomeTrend Influentials Panel corroborates that consumers loosened the strings on their pocketbooks a little towards the end of 2012.  When I surveyed them early this month, 16% of  HomeTrend Influentials Panel members reported that they spent more over the 2012 holidays than they had in the holiday season the previous year.  In August 2012, only 5% expected to spend more during the 2012 holiday season than they had the previous year.

bar chart actual spend vs expected holiday spend jan 2013

Does this mean that consumers are going to start spending again?

No. It appears that consumers experienced a temporary lift in optimism in the final months of 2012.  But in the glaring light of the new year, that optimism seems to be evaporating   In January 2013, 15% of HomeTrend Influentials reported that they were less worried about money and what the future may hold than they were 2012.  In August 2012, 23% of HIPsters said they were less worried than they had been the previous year.

bar chart chg in level of worry jan 2103

As they have been for the past couple of years, consumers will continue to be very cautious and careful in how they spend their money.