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Jul 15, 2009
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U.S. economy leveling, but shoppers not buying

By
Reuters
Published
Jul 15, 2009

CHICAGO (Reuters) - Most U.S. consumers believe the economy is not getting any worse, but that does not mean they are willing to open their wallets wider than they were three months ago, a survey conducted for Reuters found.


Photo: REUTERS/Yuriko Nakao

Of 1,001 consumers surveyed by America's Research Group, 40.1 percent said the economy was getting better and 33.8 percent said the economy was the same.

But only 33.6 percent said they were willing to spend more now than three months ago, while 64.7 percent said they were not.

"The consumer right now, if you are looking at it from a poker hand, they've folded and gone home and they will play again in a few months," said Britt Beemer, founder of America's Research Group, which conducted the survey for Reuters as part of questioning for a larger survey.

The retail sector has been hammered by the recession over the past 1-1/2 years, with consumers worrying about surging unemployment, falling home values and tighter credit markets and cutting back on spending for anything but the most essential products.

Most consumers -- 63.8 percent -- plan to spend the same on back-to-school items this year as they did last year, while 20.8 percent said they plan to spend less. About 15.4 percent say they planned to spend more, according to the survey, which was conducted by telephone July 6-10.

Also on Tuesday 14 July, the National Retail Federation released a survey that showed parents of school children from kindergarten through high school planned to spend 7.7 percent less this year than last year for back-to-school.

The back-to-school season is typically the second-biggest shopping period in the United States, as parents buy notebooks, pens and clothes for kids returning to classes.

"We could see a back-to-school season that's almost an immeasurable blip on the radar screen," Beemer said.

Clothing is the most frequently mentioned item where consumers plan to cut back, with 104 saying they would spend less in that area.

But almost 80 percent of consumers said they do not plan to buy any electronics for back-to-school. Of those that do, a calculator was the item they were most likely to buy.

Don't look for much improvement during the winter holidays, either, as 39.6 percent said they would spend less this Christmas than last, and 33.8 percent said they would spend the same amount. Only 26.7 percent said they would spend more.

The 2008 holiday season was the weakest season in about four decades.

One bright spot for retailers is that gasoline prices have stayed under control this year, compared with a surge to above $4 a gallon last year. The average price of a gallon of gasoline in the United States fell to $2.56 over the last two weeks, according to a survey released on Sunday 12 July.

That's a good thing for retailers, since 61 percent of those surveyed by America's Research Group said they would spend less while shopping if gasoline hits $3 a gallon.

(Reporting by Brad Dorfman, editing by Matthew Lewis)

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