PRINCETON, NJ -- Americans making $90,000 or more a year opened their wallets in December. Their self-reported average daily spending in stores, restaurants, gas stations, and online surged 13% in December compared to November, to $132 per day -- nearly matching their spending of a year ago ($137).
In sharp contrast, Americans making less than $90,000 a year spent 2% more last month than in November -- $62 per day; their December spending trailed December 2008 levels by 22%.
December marked the second time in three months that upper-income spending broke out of what had been a relatively tight range ($107-$121) from January to October 2009 that likely represented the "new normal" spending patterns. It may be that the surge on Wall Street and the seeming stabilization of the housing market increased upper-income Americans' confidence in the U.S. economy. In turn, this may have encouraged upper-income Americans with discretionary income who had been temporarily cutting back on their spending because of the recession to spend more during the holidays.
Women's Self-Reported Spending Up More Than Men's
Women reported average daily spending in December of $65 per day -- a 12% increase, and another reason for the holiday spending surge -- while spending among men increased 3% to $79 per day. At the same time, spending by both groups was down from a year ago -- by 21% and 19%, respectively.
Self-Reported Spending Up in All Regions but the East
Consumer spending increased in three regions in December compared with November, with the increases larger in the Midwest (14%) and the South (12%) than in the West (5%). Spending in the East was unchanged after increases in the prior two months. However, year-over-year spending was down across all regions.
Self-Reported Spending Up Across Age Groups
Month-to-month consumer spending increased across all age groups in December, with older Americans increasing their spending the most (up 11% among those aged 50 to 64 and 12% among those 65 or older) while middle-aged (30- to 49-year-old) and younger adults increased their spending less. Spending across all age groups was down from December 2008, with the largest declines among the youngest (35%) and oldest (26%) American adults.
Spending New Normal
The Federal Reserve Beige Book report on Wednesday confirmed that Christmas spending was up slightly from 2008, but was far below 2007 levels -- .
Â鶹´«Ã½AV's self-reported spending data suggest that upper-income Americans played a major role in December's spending increase. This makes sense in the context that upper-income Americans not only tend to have greater disposable income available to them but also tend to be less influenced by job-market conditions than do other Americans. In this regard, the surge on Wall Street and the optimism it generated among upper-income consumers may have been the real reason Christmas spending held up this year.
On the other hand, spending among lower- and middle-income Americans was essentially flat in December. This would not be good even if today's gas prices weren't up by about $1 per gallon compared to a year ago. Given that spending among these groups is heavily influenced by the job situation -- and that remains depressed, according to Â鶹´«Ã½AV data -- their spending may continue to be flat for months to come. That is, the new normal in spending may continue to dominate middle- and lower-income Americans' discretionary spending and may continue to favor the low-cost retailers that serve them.
Of course, the key question going forward is whether upper-income consumers will continue to spend in 2010, creating a higher new normal for spending than that of 2009 (or even reverting to earlier, pre-new-normal levels) or whether their spending will fall back to 2009 levels. In this regard, -- which was up from the comparables for the same week in 2009 -- provides some reason for optimism. Year-over-year spending was up for only one week in all of 2009, and that was the very important week just before Christmas.
Currently, the nation's policymakers are correctly and increasingly shifting their focus to job creation, particularly as the midterm elections approach. And while it may be a difficult time politically to consider the role that spending among Americans with higher incomes plays in the U.S. economy, Â鶹´«Ã½AV's economic data suggest that creating an environment that builds the confidence of these Americans and encourages them to spend their disposable incomes may be one way to also encourage much-needed private-sector job creation in 2010.
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Survey Methods
For Â鶹´«Ã½AV Daily tracking, Â鶹´«Ã½AV interviews approximately 1,000 national adults, aged 18 and older, each day. The Â鶹´«Ã½AV consumer spending results are based on random half-samples of approximately 500 national adults, aged 18 and older, each day. Results for November are based on telephone interviews with more than 14,000 adults. For these results, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage points. Results for the various breakout reported here are based on interviews with more than 1,000 respondents with a maximum margin of error of ±3 percentage points.
Interviews are conducted with respondents on land-line telephones and cellular phones.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
