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NPD Group Tracks Consumer Feelings About Economy

Stabilization shows potential for future growth.

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Shoppers’ worries about the economy are high, and intention to spend is low, but according to The NPD Group, there may be light at the end of the tunnel.

The Port Washington, N.Y.-based market research company released yesterday its Economy Tracker, which provides monthly information on consumer attitudes and spending intentions. In February, the report said, consumer feeling about the state of the economy hit its lowest point since October, the first month of tracking.

Shoppers were asked to rate their feelings about the state of the economy on a scale of zero to 100, with zero being “very concerned” and 100 being “very confident,” resulting in a low of 36.7 in February, down from 38 in October. (According to NPD, apart from a small rise in January, the indicator has fallen steadily.)

The study also measured shoppers’ plans for future spending, on a scale from zero for “reduce or spend less” to 100 for “spend more.”  In February, the indicator dropped five points from October to 35.4.

“One important thing to note here is that the two-point drop in how consumers feel about the economy in general translates to a five-point drop in what consumers’ purchase intentions are,” said Marshal Cohen, chief industry analyst for The NPD Group, in a statement. “And while a five-point drop doesn’t seem like much, it represents millions of dollars.”

However, Cohen added that NPD Group’s data indicated that customer worries about job security could be leveling off.

“This measure provides one of the best indications of how consumers are going to behave,” he said. “February’s results show consumers feeling better on this front and could signal consumer stabilization, a point at which consumers catch their breath, reassess and prioritize their purchase needs in preparation to begin spending again. Stabilization is a precursor to growth. While I think it’s premature to talk ‘recovery,’ if we are able to spot signs of stabilization, we’ll be better positioned for recovery and then the return to growth.”

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