Consumer Confidence Gains but Few Anxious To Spend

(MoneyWatch)  The recession has become something of a golden age of consumer research, which continues to reveal that consumers spending, when closely examined, defies generalization.

This week, the Conference Board, in the aftermath of a stock market rally and vaguely positive data on the housing market, reported that consumer confidence was up in April. While that boosted the stock market, a closer look at the number reveals that 45.7 percent of consumers still think business conditions are bad, down a bit from 51 percent last month but still nearly half the population. The small proportion that thinks business conditions are good edged up only slightly, to 7.6 percent from 6.9 percent in March.

Overall, consumer confidence data doesn't suggest that folks believe a recovery beckons but rather that the recession's bottom nears. Short term, fewer consumers expect business conditions to worsen, down to 25.3 percent from 37.8 percent last month, and more think things will improve, 15.6 percent versus 9.6 percent. Yet, a little math demonstrates that the majority doesn't expect real improvement over the next six months or so.

So, when will the slightly less worried consumer start sharing some money with neighborhood retailers? Research suggests that the best answer is: Not yet.

In a study from the University of Maryland, 73% of consumers said economic worries were prompting them to cut back on household expenditures.

Rather than spending based on perceptions of an improving future -- something Americans demonstrated they are inclined to do in the housing boom, the tech stock boom, the junk bond boom, etc. -- consumers are hedging their bets on an uncertain future by holding onto cash. P.K. Kannan, director of U of M's Robert H. Smith School of Business Center for Excellence in Service, noted:

It is important to understand even customers who are not adversely impacted by the current downturn feel the need to tighten their spending to cover the risk of being affected at a later point in time. Consumers feel an acute sense of loss with each purchase.

As for cost cutting targets, the U of M study said 58 percent of consumers report they are dining out less, 53 percent are traveling less and 47 percent are attending fewer sporting events. If U of M didn't discuss any improving sectors, it did demonstrate some are doing better, or perhaps less worse is a better way to put it, than others. Relative success can be found in cable television, where "only" 28 percent of consumers plan to cut or drop service, and landline telephone connections, where only a quarter plan to sever the link.

So, is anybody spending right now? In fact, young males are. According to marketing agency Euro RSCG Worldwide, only 35 percent of young males are engaged in money saving activity compared with 41 percent of young females and the overwhelming majority of the overall population. The major recessionary affect on young males, it seems, is a strengthening of brand loyalty. About a third of young males report they always or usually buy brand name clothing at full price versus 20 percent of young women. And just under half of all young men report that they continue to purchase high end brands.

So, when it comes to consumer spending, male vanity seems to be a constant retailers can count on in a recession.