Latest Data on Consumer Spending Intentions

The latest Gallup polling on the American economy shows that consumers' spending intentions held steady in October. According to the Oct. 6-8 poll*, 27% of Americans say they intend to increase their overall spending in the next six months (25% said so in September), and 48% expect to maintain their current level of expenditure (compared to 47% last month). And looking only at the total number of Americans who expect to increase or maintain their level of spending over the next six months, spending intentions show no signs of flagging. In response to the September Gallup Poll, 72% of Americans said they would increase or maintain spending; this number climbed slightly to 75% in October -- two percentage points short of its 2003 peak of 77% in June.

So even though analysts are uncertain as to how sustainable the current level of consumer spending will be, and wait and watch for more encouraging signs from a weak labor market, most consumers are saying that they will keep spending.

The Drivers of Consumer Spending

This finding comes in spite of the fact that income and employment data from the October poll reveal the fundamental drivers of consumer spending remain weak.

Thirty-seven percent of Americans expect their incomes to increase in the next six months, and were about equally as optimistic at this time last year, when 39% of consumers expected their incomes to grow.

Most consumers are not enthusiastic about prospects for income growth, nor are they entirely convinced that the unemployment situation will improve in the near term. The October Gallup Poll shows that 71% of adults who are employed or looking for work believe that "thinking about the job situation in America today, now is a bad time to find a quality job." And 44% of Americans believe that the unemployment rate will increase over the next six months.

Bottom Line

While the latest Gallup Poll shows that consumer spending intentions are strong, the underlying drivers of consumer spending remain fragile. As interest rates begin to rise and the cost of borrowing increases, consumers will be forced to take on less debt and cut back on spending. In the meantime, the October Gallup Poll reveals that three out of every four Americans have pledged to keep consumerism alive -- at least for the next two quarters.

*Results are based on telephone interviews with 1,017 national adults, aged 18 and older, conducted Oct. 6-8, 2003. For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±3 percentage points.