Cheerful Shoppers vs. Grumpy Accountants

Whether you believe the economy is going to substantially improve over the next year, stay about the same, or get worse, you can find surveys that back up your point of view. Economic experts are always out there bothering people with survey questions, collating the data and reading the future from the results—almost like fortune tellers at the circus. One of the blessings of being an economist of course is that no one seriously expects their predictions to be right, but we all pay attention to them. In some ways it is the ideal career.

You often see conflicting opinions published the same day, such as the fourth quarter AICPA-UNC Business and Industry Economic Outlook Survey and the Deloitte’s Annual Holiday Survey. AICPA is the American Institute of Certified Public Accountants. UNC is the University of North Carolina; their Kenan-Flagler Business School helped conduct this survey of CPAs in the corporate world, including chief financial officers and controllers.

@@AdsenseLeft@@ The second survey was done by Deloitte & Touche LLP, a large consulting and financial advisory firm; they talked to consumers all over the U.S. about their shopping plans for the holidays, with some of the most interesting results coming from the Tri-State (New York, New Jersey, Connecticut) area. Deloitte has been conducting these Holiday Surveys of retail spending and trends for more than two decades.

The two survey groups had completely different views of our economic future. To sum up, the CPAs were gloomy, the shoppers peppy.

Fully 40% of the CPAs expressed a pessimistic outlook about the economy, and they seemed to be getting more pessimistic about when a true recovery might occur.  Six out of ten do not believe the economy will improve until the third quarter of next year—or later; and 25% say we will have to wait until 2011 to see improvement. Three months ago, only 43% thought we would have to wait as long as mid 2010 to see improvement.  Only 38% of these financial executives were optimistic about their own company’s near term prospects. When evaluating this information, we have to temper it with the realization that having positive mental attitude is not one of the requirements for earning an advanced degree in finance.

Now, let’s see what shoppers have to say. The survey’s press release was titled “A Holly Jolly Outlook.”  That gives us somewhat of a clue. The survey reports that in the Tri-State Area, 56% of consumers anticipate the economy will improve in 2010.  Importantly, they plan on translating this optimism into action, by spending an average of 24% more this holiday season than last year. The average planned expenditure is a healthy $1,630.

This doesn’t mean they are going to foolish with their spending. Their purchasing behavior is expected to be downright frugal. Two-thirds of shoppers will seek out sale items. Half of consumers will be energetic coupon clippers. More than half will spend less on themselves, and 47% say they will buy lower priced goods and services.

And there is a bit of a Scrooge-like trend emerging: the amount they plan to spend on gifts will be 19% lower than last year, but they are more than making it up by spending a whopping 65% more on holiday furnishings, non-gift clothing, entertaining and social events. In other words, they plan on having more fun.

As Deloitte & Touche partner Jay Scansaroli expressed it, “Consumers in the Tri-State area are ready to share the yuletide spirit with an increase in holiday budgets and spending.”

It might be a good idea if these optimistic New Yorkers reached out to those in serious need of cheer in this season of giving.  Maybe invite a CPA to their holiday party.  Don’t forget the eggnog.