Survey Indicates Good Potential for Increased Spending
A new survey by the American Affluence Research Center finds the current business conditions at its highest reading since fall 2007.
The assessment of current business conditions rose 22 points to an index of 93, according to a survey by the American Affluence Research Center of the wealthiest 10 percent of U.S. households. This standing is now 40 points above the fall 2012 index and is also the highest reading for this index since fall 2007, indicating good potential for increased spending by affluent and luxury consumers, who account for almost half of all consumer spending.
Both the indices for future business conditions and change in the stock market are in positive territory and essentially unchanged from the spring 2013 survey. This is contrary to the pattern in 2011 and 2012 when all three indices were higher in the spring than in the preceding and subsequent fall surveys. According to the American Affluence Research Center, the affluent seem to have a modestly better outlook for the future than the general public.
About 80 percent of households surveyed expect their net worth to be the same or higher in the coming months, while two-thirds expect their income to be the same or better. Almost two-thirds say they do not plan to defer or reduce expenditures during the next 12 months, which represents an improvement of seven percentage points from the spring 2013 survey.
These expectations regarding future income and net worth correlate with spending plans. The average index for changes in spending plans is 44 percent higher for those expecting an increase or no change in their net worth, versus those expecting a decline in net worth.
Among the affluent households, the average expenditure for holiday gifts in 2013 is estimated to be $2,175, a decline of 2.8 percent from 2012. However, the survey found that the affluent spent almost 7 percent more than they had anticipated in 2012.
The expenditure per affluent household for gifts is about four times that of all households, as estimated by the National Retail Federation, which has forecast a 3.9 percent increase in total retail holiday gift sales for this year.