New Pres. Boosts Consumer Confidence
A new administration has delivered a jolt of confidence to consumers, but don't expect high levels of spending to return yet, according to a new report from eBillme.
Conducted among 1,600 respondents by the Wilmington, Del.-based online payment firm, the survey found that 51 percent expect to feel more confident with a new administration in charge, and 28 percent feel more comfortable increasing their daily spending.
Based on recent weeks' sales, Michael Hackley, CEO of Inc. 5000 company ShoppersChoice.com, agrees that confidence is on the upswing. In early January, sales were down, but their analytics indicated traffic was up, with less spending. But a few days before the inauguration, their conversion recovered.
"The election is like anything—people wait in the background to see what they'll do, but after the smoke and guns clear, they start to get a little more confident. We're starting to see that [confidence] in our revenues, and my confidence has definitely picked up as well."
But while confidence is recovering, consumers are still cautious with their money. They plan to spend only $75 online in the first quarter of 2009, compared to $175 in 2008's fourth quarter.
While January is always slow after the Christmas rush, eBillme CEO Marwan Forzley expects to see lower spending rates extend further into future. He predicts the end of the era of competitive consumption fueled by cheap credit.
"People are shifting their purchases from credit to cash and debit and spending less," he said.
While his sales are up for the year, Rob Heller, CEO of DealYard, another Inc. 5000 company, doesn't expect a new administration to alter consumer habits in the short term.
According to Heller, "Americans may be optimistic about the future – but companies' earnings are still bad and there continues to be many announced layoffs resulting in high unemployment."
"As long as this is the case, consumer spending habits will be very cautious," he added.