The current economic downturn in the US is leading consumers to cut back on their spending, as they don’t see the economy returning to normal until the second half of this year, according to a survey conducted by BIGresearch.
Not surprisingly, consumer behaviour has changed somewhat in the States since the attacks there. “It certainly looks as if the events of September 11 have had a profound effect on the types of products people are buying and their behaviour patters. Consumers appear to be more grounded in their homes and more practical and less impulsive when purchasing products,” said Joe Pilotta, vice president of research for BIGresearch.
“If these patterns continue, it could have a profound effect on retail strategies developed for a pre-September 11 world,” he warned.
The survey found that 62.9% of people feel that it will take from six months to more than a year for the economy to get back to normal. Consumer confidence has not improved since December, found BIGresearch. “The general uncertainty towards the economy that consumers are feeling appears to have created a desire to put their financial houses in order,” reads the report.
Meanwhile, the US Treasury Secretary Paul O’Neill has said that the outlook for the nation’s economy is now ‘on the positive side’. He predicts stronger growth to come later on this year.
Despite consumers’ caution, December retail figures in the US, released yesterday, were better than expected and it will be spending levels that will help boost the economy back into growth. December saw sales down 0.1% on November, even though economists expected a 1.4% decline.
Comment The health of the economy in the US is particularly significant for its knock-on effects to the UK. Strengthening conditions there will almost certainly have positive effects here, even though the UK has not felt the downturn anywhere nearly as strongly as the US.
