By Paul Carton
June 1, 2009

The signs of improvement reported in our April consumer survey have continued to gain momentum, according to ChangeWave’s latest survey of 2,729 consumers.

The May 5-11 survey shows that while consumer spending remains low by historical standards, we’ve witnessed the most sustained improvement over the past 60 days that we’ve seen in more than 3 years.

We note that coming out of a recession is usually far bumpier than going into one, so while it’s encouraging that the worst appears over it is premature to say that we’re entirely out of the woods yet.

One-in-five U.S. respondents (21%) now say they’ll spend more money over the next 90 days, a big five point jump since April. Another 47% still say they’ll spend less, but that’s eight points better than previously.



The 13-point net gain going forward is the most significant improvement in consumer spending in nearly three and a half years. Moreover, the spending outlook has improved across all income categories, even among lower income households (under $50,000 per year).

A Surge in Consumer Sentiment and Expectations

We also asked respondents about their impressions of the economy, and found consumer sentiment and expectations have continued the dramatic improvement that we first picked up in April.

Nearly a third of respondents (31%) think that the overall direction of the U.S. economy is going to improve over the next 90 days, while just 27% believe it will worsen. That’s a 24-point net improvement since April, and the highest level of optimism that we’ve seen since we began asking this question back in September 2007.



The same is true in terms of consumer confidence in the U.S. stock market. A total of 45% now say they’re More Confident now than they were 90 days ago – a 13-point jump from previously. Only 16% say they’re Less Confident – 7-points improved.

The improvement in consumer spending behavior is occurring across multiple categories. In particular, spending on Restaurants, Consumer Electronics and Household Repairs/Improvements continues to build momentum.

Travel/Vacation has also experienced an increase – and while its partially due to seasonal factors, it’s nonetheless a positive sign for the sector.

Retail Store Trends

In perhaps the most encouraging sign, our latest results show positive movement for several of the big shopping retailers – including Target (TGT) (up 3-pts), T.J. Maxx (TJX) (+ 3), Bed, Bath and Beyond (BBBY) (+2), and Macy's (M) (+2).

We also note that despite the spending uptick it’s still the big discounters – Wal-Mart (WMT) and Costco (COST) – that appear best positioned to outperform going forward.



In terms of online shopping, Amazon (AMZN) continues to excel and remains one of the momentum leaders in our survey for the 6th consecutive month. As an example, 27% of respondents say they’ll shop at Amazon for home entertainment and computer networking products over the next 90 days – a 4-pt jump just since April.

Apple (AAPL) also shows additional momentum in the home entertainment market.

What’s the bottom line?

ChangeWave’s latest consumer survey shows that the improvement in U.S. consumer spending is continuing to gain momentum in May.

And while consumer spending remains low by historical standards, we’ve witnessed the most sustained improvement over the past 60 days that we’ve seen in more than 3 years.

One potential concern is that some of the improvement we’re now seeing may be due to the income tax refund checks many consumers are currently receiving along with the additional tax credits resulting from the 2009 U.S. stimulus package. It begets the question: How will consumers react once their tax refunds have been spent?

Stay tuned. We’ll know more after our next consumer survey is completed in a few weeks.