Consumers will increase their spending this spring, encouraged by what they perceive as a better job market, says consultants Retail Forward Inc.'s Future Spending Index. The index increased in April for the second month in a row, rising to 107.5 from 101.6 last month.
“Despite fears of an impending slowdown, shoppers are telling us they plan to boost their spending in the near term primarily because they feel better about job prospects," said Steve Spiwak, Retail Forward economist. "What's encouraging is that the optimism is broad-based, with Down, Middle and Up Market shoppers all expressing heightened optimism."
Retail Forward reports:
• The index for Middle Market households (incomes between $22,500 and $75,000) registered 104.4 in April, up from 98.8 in March. A significant improvement in assessments of jobs and incomes compared with last year drove the increase. The positive wealth impact from better investment performance and a pick up in home buying contributed.
• Job growth and stronger home buying also buoyed the Down Market segment (incomes less than $22,500). The index climbed to 116.2 compared with 110.0 a month ago. Extra cash freed up from stronger refinancing activity also played a roll.
• The index for Up Market households (incomes greater than $75,000) was up 6 points from March to 107.6. The recent stock market run-up and a brighter employment outlook are boosting spending intentions of more affluent households.
In addition, the National Retail Federation reports that retail industry sales for March, excluding automobiles, gas stations, and restaurants, rose 7.2% over March last year. “In spite of economic concerns, consumers are still demonstrating their ability to spend,” said NRF chief economist Rosalind Wells. “With gas prices continuing to rise and the slowdown in the housing market, we expect consumers to become more conservative as the year goes on.”
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