High-Income Investors Optimistic

Consumers in the US are more realistic about the state of the economy, with a narrow gap between expectations and assessments of the economy, according to Ipsos' National CASH Index Poll. Most are being cautious after a rollercoaster year, reflected in the movement of the Index, but high income investors are beginning to sound more bullish after a good quarter on the markets.

CASH stands for Consumer Attitudes and Spending by Household and the poll is a bimonthly national survey of consumer attitudes on the current and future state of the local economy, personal financial situation and spending, saving and confidence to invest. Over the past year the index has moved rapidly, from around 100 in Spring 2002 to 82.9 in July 2002, down to 61.4 by Spring this year and back to its current value of 79.8 (July '03).

One theory for these big fluctuations is that back in July 2002, consumers were still in a post- 9/11 mood with a real reluctance to say anything negative about the US or concede that the economy had slid into a recession. Perceptions of the local economy were neutral, but expectations about the future were glum, resulting in a gap between current assessments and expectations that bred pessimism. Today consumers are willing to express serious concerns about the current conditions of their local economy, while continuing to express doubts about the future. The gap between current assessments and expectations is therefore much narrower, with less of a sense of being at a precipice.

Consumers are now significantly more comfortable making a major purchase like a home or car than they were a year ago, indicating a feeling of increased stability. However, this new confidence is being fuelled largely by high-income investors: those earning more than $50,000 per year are generally more confident about both current conditions and future expectations than non-investors, who show little change vs July '02. This is no doubt driven at least in part by the large stock market gains over the last quarter. High-income investors have also become less concerned about job loss, and are emerging as a distinct group of consumers with attitudes different from the rest.

The National CASH Index is constructed twice monthly throughout the year. In addition, Ipsos constructs regional and demographic CASH Indexes four times per year (at the end of each fiscal quarter), as well as preliminary indices (produced at the mid-point of each fiscal quarter). The CASH Index is part of Ipsos-Public Affairs weekly omnibus polling service. The Index started in January 2002.

Interviews for the latest polling were conducted between June 17 to 19 and July 8 to 10, 2003, with a total of 2000 adults.

For more information e-mail CASH@ipsos-na.com

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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