As Americans head to the malls this holiday shopping season, they are less optimistic on the economy than they were a year ago, and that could depress their spending plans.
The CNBC All-America Economic Survey finds that just 22 percent of the public sees the economy improving, a 5-point drop from more buoyant levels a year ago. Key economic indicators gauged in the survey, including views on whether home prices and wages will rise next year, weakened at the start of the Christmas season.
Just 35 percent of those surveyed think their wages will increase in the coming year, down 5 points from a year ago. And 36 percent see their home price rising in the next 12 months, down from 40 percent a year ago.
The nationwide poll of 800 Americans was conducted Nov. 29 to Dec. 2 and has a margin of error of 3.5 percentage points.
Views on the current state of the economy remained largely unchanged, with a quarter of respondents gauging it to be good or excellent and 73 percent saying it’s just fair or poor, on par with last year. But the combination of less optimistic views on the economy, wages and home prices suggested less spending this holiday season.
Just 13 percent plan to spend more; 56 percent are planning to keep holiday spending at last year’s level and 29 percent said they will reduce spending. The percentages are little changed from last year, though they do represent an improvement from the worst days of the recession and its aftermath. For example, in 2009, nearly half of the public said they would spend less for the holidays.
Total spending is forecast to come in at just $672 per person, a 12 percent decline from the actual level a year ago as measured by the National Retail Federation. The NRF forecasts a 3.7 percent gain this year. The CNBC survey was conducted later and could be lower because it appears that a considerable amount of holiday spending took place early this year.
On the plus side for consumers are lower inflation and gas prices. Only 59 percent of respondents said prices will go up next year, the second-lowest percentage in the nine-year history of the survey. And the median expected increase is just 1.8 percent, a record low for the survey.
When it comes to lower gas prices, 14 percent said they will spend their savings at the pump, compared with just 8 percent a year ago — a potential plus for Christmas spending. A similar percentage will use the extra cash to pay down debt and to bolster their savings. But 13 percent are driving more and 7 percent say specifically they will travel by car for the holidays because gas prices are lower.
In contrast to views on the economy, attitudes toward the stock market have improved. Thirty-seven percent of respondents said this is a good time to invest but an equal percentage said it’s a bad time. Last quarter, 13 percent more Americans were pessimistic about stocks. The levels, however, remain below where they were at the beginning of 2015, when more respondents said it was a good time to invest in stocks rather than a bad time.
The increase in optimism over equities comes entirely from those with money in the market. The 44 percent who are not invested in stocks remain about as pessimistic as they ever were over the outlook for equities.