CHARLOTTE, NC — Consumers are expressing growing optimism over the state of the U.S. economy, and are more bullish about their personal spending plans than they were 12 months ago.
That is the key finding of new research conducted by the Research Institute for Cooking & Kitchen Intelligence (RICKI), which interviewed 1,510 consumers across the country last spring and another 2,906 consumers recently to assess opinions about the economy.
Research findings were made available exclusively to Kitchen & Bath Design News by the Charlotte, NC-based RICKI, an independent, membership-based organization of manufacturers, retailers, wholesalers and publications whose revenues come from sales related to activities that take place in the kitchen, including kitchen remodeling.
“Consumers have clearly become increasingly more optimistic about the country’s overall economic health over the course of the year,” says N. Riley Kirby, RICKI’s chief of research. “For example, there are now twice as many people describing the economy as ‘good’ or ‘excellent’ as there were this time last year. And the number of people who feel the state of the economy is ‘poor’ dropped by half, down from 44% describing it as ‘poor’ in 2009 to 23% currently.”
According to RICKI, although a majority of survey respondents believe the U.S. economy is still weak, they are far more positive than they were in the 2009 RICKI survey.
In addition, consumers typically view the state of the nation’s economy more negatively than their own personal finances.
In both study periods, respondents express far more positive feelings about their own financial situation, and their sentiments are relatively unchanged year to year, RICKI said.
Improved Spending Plans
Participants in the two RICKI studies were presented with four statements describing personal spending habits and asked to select which of the four best describes their spending compared to the 12 months prior. Findings indicate that spending patterns have not changed significantly over the course of the past year, RICKI said.
“As we found in last year’s economic study, around one-third of respondents say they have cut out spending on all major purchases until the economy improves, while around half have reduced their daily spending but not dramatically,” Kirby observes (see Table 1).
People who had either eliminated or reduced their spending were asked if they are likely to increase their spending when the economy improves, or if they think they will never spend as much as they once did.
Comparing the responses year to year indicates a shift toward significantly more people saying they’ll increase their spending when the economy rebounds (see Table 2). Three out of five of those who had cut back say they will likely increase their spending when the economy improves, compared to only two out of five who said so last year.
The impact of the economic downturn is also viewed differently by certain demographic segments, according to RICKI. Comparing the findings from the two RICKI studies indicates, for example, that men and younger people are more positive than their counterparts.
According to the study findings, men are three times as likely as women to say their personal finances are “excellent” (6% and 2%, respectively). Men also are more inclined than women to say they will increase their spending once the economy rebounds. Half of women in the study (53%) now say they will likely increase their spending when the economy improves compared with almost two-thirds of men (63%), according to RICKI.
Looking at the survey results by age reveals that younger consumers are significantly more upbeat than their older counterparts, Kirby points out. As age increases, the inclination to say they’ll increase their spending when the economy improves declines. Still, half of those aged 45 and older (50%) plan to increase spending when they feel the economy has improved sufficiently, Kirby adds.
This optimism about increasing spending when the economy improves also is evidenced even more in upper-income households. Almost two-thirds (65%) of those in households with incomes of $100,000 or more who cut spending say they will increase spending when the economy improves compared to around half (52%) of those with incomes of less than $50,000.
“Consumers may be experiencing what economists are calling ‘recession fatigue,’ a syndrome in which pent-up demand results in increased spending because people are tired of gripping their purse strings so tightly,” says Kirby, adding that the results of the 2010 RICKI study have “moved me from cautiously optimistic to optimistic.”