Consumers Cutback on Short-Term Spending, But Less Apprehensive About Long-Term Security
State residents are becoming less worried about prospects for improved business conditions, employment and the overall state economy in Connecticut. At the same time, concern about personal finances is increasing, as reflected in reductions in short-term consumer spending. Looking further ahead, apprehension about long-term issues – such as health care, retirement, and jobs – has diminished, according to the latest quarterly InformCT Connecticut Consumer Confidence Survey.
For the second consecutive quarter, 77 percent believe that overall business conditions in the state are the same or better now than six months ago. And for the third consecutive quarter, the percentage who believe conditions will be the same or better six months from now has grown – now at 81 percent, the highest level since the first quarter of 2015. The percentage who say they expect that conditions will be better (31%) is the highest in the nearly four years of quarterly consumer confidence surveys.
Regarding the state’s employment situation, 81 percent feel that compared with six months ago, there are either plenty of jobs for anyone who wants to work, or some jobs but not enough. Only 19 percent say that jobs are very hard to get – the lowest percentage in the 15 quarterly surveys, and down from 26 percent a year ago. An even lower percentage (13%) believe the state’s employment situation will be worse six months from now, also the lowest percentage seen in the quarterly survey.
When asked if they believe that the state’s economy is improving, for the third consecutive quarter, the percentage of state residents who disagree has dropped. It now stands at 40 percent, down from 50 percent a year ago and 56 percent in the second quarter of 2017.
InformCT is a public-private partnership that provides independent, non-partisan research, analysis, and public outreach to help create fact-based dialogue and action in Connecticut. The survey, conducted quarterly since 2015, is administered by researchers from the Connecticut Economic Resource Center, Inc.
More Concerns about Personal Finances
As to the personal financial situation of state residents, 38 percent said they expect to be better off in six months, compared with 46 percent and 43 percent who expressed that view in the previous quarters. Only 28 percent said they were better off now than six months ago, compared with 32 percent last quarter.
That less optimistic outlook is reflected in reduced short-term spending, in many cases at the lowest levels since the quarterly survey began in 2015. For example, in the next six months:
- 58 percent said they were likely to take a vacation outside Connecticut, the lowest in nearly three years (4th quarter of 2015) and third consecutive quarterly decline
- 36 percent said they would make a major consumer expenditure, the lowest in just over a year (2nd quarter of 2017)
- 25 percent said they were likely to purchase a new car, the lowest percentage in more than a yea
- 13 percent said they were likely to refinance or buy a new house, the lowest in three years
Yet, long-term financial concerns have lessened.
- 58 percent were concerned about affording health insurance, the lowest percentage since 2016
- 27 percent were concerned that their job, or their spouse/partner’s job, was in jeopardy, the lowest percentage since the surveys began (high was 42 percent in the first quarter, 2016)
- 27 percent said they would have enough money to retire comfortably, the highest since 2017
“Connecticut residents are more upbeat about the state’s financial prospects, but more concerned about their own. That is a reversal of past trends. Given the uncertainties in the immediate future, they’re holding back on major spending, but the long-range optimism regarding their own financial situation still remains,” said Alissa DeJonge, Vice President of Research for the Connecticut Economic Resource Center.
The survey also found that just over half (54%) of state residents say that Connecticut is a good place to live and raise a family, while 24 percent disagree. That 30-point spread has increased from less than 20 points a year ago (Q3, 2017) when it was 48%-29%.
The online survey of 505 state residents, conducted in late September 2018, has a margin of error of 4 percent. [The latest quarterly survey also included questions about fiscal issues facing the next Governor; that data was released last week.]