American shoppers in a dour mood

It probably comes as no surprise, but American consumers are planning to spend less this holiday season than they did last year, according to the RBC Consumer Outlook Index.

The monthly survey found that 46% of shoppers plan to spend less, and an additional 8% said they will spend nothing at all. Matters were no better among households with children, with 50% planning spending cuts, and 6% planning no spending.

Only 7% of Americans—9% of families with children—expect to spend more this holiday season than last.

These dreary holiday plans match the overall sentiment in the country, where only 35% believe the U.S. is heading “in the right direction”, while 65% think it is on the wrong track. The survey was conducted just before Tuesday’s mid-term elections. (Read: Ignore U.S. election ‘buy’ signal.

With such a dim opinion of the country’s direction, it’s little shock that 69% expect no improvement in the coming year for either the overall economy, or their own personal financial situation.

But despite this negativity, consumer spending was actually higher in the third quarter.

“This disconnect will have to be resolved, and the first real test is upon us with the beginning of the holiday shopping season,” said Marc Harris, co-head of Global Research at RBC Capital Markets. “If it turns out that the spending last quarter was simply the result of pent-up demand and consumers are returning to frugality just in time for the holidays, this will not come as good news for retailers.”

On the investment front, 48% of Americans say that they are unsure if it is a good time to invest in the stock market. Among those who currently own stocks, 40% were unsure.

(11/04/10)