U.S. Upper-Income Spending Slips in October

U.S. Upper-Income Spending Slips in October
Upper-income consumers in the U.S. held back on spending in October, reporting a daily spending average of $116, down from $126 in September, and the lowest monthly average since June. The decline came despite the typical bump in spending for Halloween and preparations for superstorm Sandy in the Northeast. The monthly average for October excludes Oct. 29 and Oct. 30 -- two days during which business came to a standstill in many communities in the Northeast as the storm arrived.

Gallup tracks daily how much Americans report spending the prior day, apart from normal household bills or the purchase of a car or home. These results are based on Gallup Daily tracking from Oct. 1-31, excluding Oct. 29-30. While spending fell significantly among upper-income consumers -- defined as those making at least $90,000 per year -- spending among those making less than that held steady, at $62 per day, compared with $61 in September.

As a result, the national picture showed a slight decline, to $72, from $74 in September. This also marks a decline from $77 in August, when spending reached a four-year high. Still, the $72 daily average for October is up slightly from $70 in October 2011 and is the best October reading since 2008, when the daily average fell to $91 after the global economic collapse.

Gallup's weekly average on this metric shows spending declined each week of last month, from $86 per day during the first week to $63 during the last week. It is possible that superstorm Sandy affected spending at the end of the month, including Halloween spending. Even so, spending in the East increased to $77 -- the highest figure among the four regions -- from $73 in September, perhaps due to storm preparations. Spending in the West declined the most, to $71 from $80 in September. Spending in the Midwest remained steady but was the lowest among the regions.

Implications

The October decline in upper-income consumer spending is a potential problem spot at a time when Gallup is documenting significant improvement on other economic indicators in the U.S., including economic confidence and unemployment. Gallup has often found that consumer spending and job creation are slow to improve even when other metrics show improvement.

Consumer spending is of course critical to economic growth and, in turn, to businesses' ability to hire new employees and create jobs. This metric will also provide a daily gauge of the important holiday spending season ahead.
From: http://www.gallup.com
Updated: November 2, 2012