Consumers May Spend Again as Job Worries Lighten

Consumers may not be ready to beat down the doors of their local retailers yet, but they are a little more convinced they’ll hold onto their jobs, which may set the stage for a turn around in purchasing intention.

In February, 26 percent of people responding to the NPD Group’s Economy Tracker study were not concerned about their jobs or income, 40 percent were somewhat concerned and 34 percent were very concerned. Those numbers represents a bit more optimism on the high and low ends over January, when 25 percent were not concerned and 38 percent very concerned, and February, when 25 percent were not concerned and 36 percent very concerned.

The shift is subtle but significant, said Marshal Cohen, NPD Group chief industry analyst, because how consumers feel about their job and income security is actually the best measure of what they are going to do in the future. He said February’s data indicates that “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.”

We’re not out of the woods yet, of course. Consumer confidence in the economy, which began to slip in December continued its slide in February, according The Economy Tracker. The one hundred point NPD scale for consumer confidence hit a worried low of 36.7% in February down from a slightly less concerned 38.8% in December, when confidence hit its peak in the period since the economy nosedived in October. In the meantime, spending intention – based on consumer plans to make purchases rather than sock away their money – started to slide toward the frugal again after holding roughly steady since the beginning of the year. On the NPD scale, the intention to spend rated 35.4 in February from 36.7 in January, 37.1 in December and, going back, 40.7 in October.

While not a rosy assessment, at least the NPD figures, along with some positive housing data released recently, activity on Wall Street over the past couple of weeks and some relatively good retail sales news for January and February, suggested at least that the bottom of the recession may be in reach.