Consumer Confidence Improves, Remains Guarded

Tumbling oil prices and a rebounding stock market appear to have placated Americans’ economic jitters, resulting in a mid-summer halt in the downward spiral in consumer confidence, according to a report released by Ipsos, a market research company. The shift in consumer climate could bolster coupon marketing campaigns, as shoppers continue to seek bargains.

Overall consumer confidence, as measured by the RBC CASH (Consumer Attitudes and Spending by Household) Index, rose 19.2 points in August, according to Ipsos Public Affairs. As a result, the overall RBC CASH Index for August, released by RBC, stood at 33.8, compared to the all-time low of 14.6 recorded in July.

“Consumer sentiment bounced back due to a moderation in the prices of gasoline and oil as well as a modest rebound in the equity markets,” said T.J. Marta, economic and fixed income strategist for RBC Capital Markets. “However, the ongoing decline in house prices, continued tight credit conditions, and soft jobs market indicate that, while sentiment might be in the process of bottoming at a very depressed level, it has not likely begun an upward trend.”

Although it remained in negative territory for the eighth consecutive month, the RBC Expectations Index increased 50 points to -4.7 in August. The shift was attributed largely to an improvement in Americans’ expectations for personal finances and the economy as a whole. Still, more consumers believe their local economy will be weaker in six months than stronger (26 percent compared to 23 percent), indicating the tenuous nature of consumer expectations.

Similarly, the RBC Current Conditions Index stood at 36.7 in August, up 6.2 points after dropping sharply the previous two months. The slight improvement was attributed more to a decrease in consumer negativity than any surge in confidence.

Consumers’ guarded optimism could mean a continued boost to carwash direct marketing programs, as well as print and online coupon campaigns. Coupon use has been on the rise in recent months, according to several analysts.

While The Nielsen Co. reported in July that 63 percent of consumers were reducing spending, increased fuel prices prompted nearly one-third (32 percent) of shoppers to use more coupons as a way to save money.

“Consumers tell us that they are using more coupons, an opportunity for consumer packaged goods manufacturers to align coupon and other promotions in stores serving consumers feeling the greatest impact from high gas prices,” said Todd Hale, senior vice president of consumer and shopper insights for Nielsen.

According to Scarborough Research, the number of American households seeking coupons via the Internet has increased 83 percent since 2005, although the total number of households using the Web for coupons is at just 11 percent.

The Sunday newspaper remains the number one place consumers acquire coupons, with 53 percent of households sorting through ads for good buys, according to recent Scarborough data. Other leading methods for acquiring coupons include the mail (35 percent of households), in-store coupons (33 percent), preferred customer/loyalty cards (22 percent), in-store circulars (22 percent) and weekday newspapers (17 percent).

“With prices for consumer goods rising, we can only expect that a ‘good deal’ is of increasing importance to shoppers,” said Alisa Joseph, vice president of advertiser marketing services for Scarborough Research. “Coupons are one of several economically focused promotional tools that stores and product brands can use to get shoppers in the door and spending, despite these uncertain economic times.”