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ChangeWave Research: Consumer Spending

October Consumer Spending ReportOverall U.S. Spending Holds Steady for October – But Consumer Electronics Surges AheadJean Crumrine and Paul Carton

Overview: After a six month slowdown, spending improved slightly in last month’s ChangeWave survey – but a brand new survey of U.S. consumers shows the outlook simply holding steady for October. ChangeWave Research is a division of The 451 Group.

The October 3-14 survey of 2,603 U.S. consumers does point to an uptick in a handful of spending categories – led by a surge in consumer electronics – and including travel, autos, and durable goods. Among retailers, Amazon (AMZN) looks best positioned to outperform going forward.

The survey also picked up a slight improvement in consumer expectations and confidence. That said, as we approach the critical holiday season, there are few signs the U.S. will experience the growth rates in spending that it did one year ago.

Consumer Spending Outlook

A total of 22% of U.S. respondents say they'll spend more over the next 90 days than they did a year ago – 1-pt worse than our previous survey in September. While 38% say they'll spend less – that’s unchanged from previously.

Putting These Findings in Context. After last month’s improvements, the following chart shows consumer spending holding steady for October. But in the crucial weeks leading up to the holidays our findings have yet to show signs of the overall surge in consumer spending that many retailers are banking on.

This information is from ChangeWave Research, LLC, a division of The 451 Group, and contains confidential business information.It may not be copied or distributed without permission. ©2011 ChangeWave Research, LLC. All rights reserved.

October 24, 2011


Individual Spending Categories

At the individual category level, consumer electronics spending going forward has suddenly caught fire – much of it likely related to new product releases from Apple and the upcoming release of an Amazon tablet. In addition, a handful of other spending categories are showing a slight uptick.

Consumer Electronics leads going forward, with 18% saying they’ll spend more on electronics over the next 90 days – a major 4-pt surge. While 32% say less, that’s also 2-pts better than last month.

In other findings, spending on Travel and Automobiles are each up 2-pts this month. Moreover, Consumer Durable Goods is registering a slight 1-pt uptick.

On the downside, Restaurant spending (down 1-pt) is still not showing signs of an uptick. And after a brief improvement last month, spending on Household Repairs/ Improvements has declined 3-pts for October.


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Early Indications on Holiday Spending An early reading on consumer holiday shopping shows spending intentions are down slightly compared with last year.

Only 4% say they’ll Spend More Money on holiday shopping this season and 25% Less – a net 5-pts worse than the reading we saw a year ago in our October 2010 survey (when 6% said More and 22% Less). Respondents also report they’ll be buying gifts for fewer people.

Importantly, it’s still early and holiday spending forecasts normally rise as we move closer to the actual season. We’ll provide a definitive forecast on spending for the upcoming holiday season in our November consumer spending report.

Retailer Trends

Holiday shopping is by far the most important time of the year for retailers, but with few exceptions our results are unchanged or down slightly for the major brick and mortar outlets.

Costco (COST), however, is up 2-pts and continues to lead major retailers in terms of spending growth going forward – although its improvement is below that of a year ago.

Kohl’s (KSS; up 1-pt) also shows a slight improvement.


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ChangeWave Research: Consumer SpendingWe note that Walmart (WMT) has declined 2-pts since our September survey and is clearly not showing the U.S. market strength of previous years. One need only look at this month’s Online shopping results to better understand why major brick and mortar retailers are having problems garnering a bigger piece of the shopping pie.

Amazon (AMZN) continues to outperform among online retailers, with one-in-five respondents (20%) saying they’ll spend more money with the industry leader this month – a 5-pt jump from just three months ago and similar to the huge burst of momentum we saw for Amazon during the 2010 holiday sales season.

Home Entertainment Retailers. Amazon is also outperforming in the home entertainment/ computer networking market, with 41% of respondents saying they’ll shop there over the next 90 days – a 3-pt uptick since September and its highest level ever in a ChangeWave survey.

In contrast, the outlook for Best Buy (BBY) remains flat – with just 31% saying they’ll shop there for home entertainment/computer networking products going forward, unchanged from last month. Importantly, this contrasts from a year ago (Oct 2010) when we saw a major uptick in momentum for Best Buy heading into the holiday season.

We note that Apple (AAPL) remains at an all-time high in the home entertainment market, with one-in-five (20%) saying they’ll shop at Apple stores for home entertainment and computer networking products in the next 90 days.


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Amazon Kindle Fire

We also took a closer look at demand for Amazon’s new Kindle Fire tablet. The Android-based tablet device is scheduled for mid-November release – in time for holiday shopping – and our survey results show it could potentially be one of the season’s hottest gift items.

Note that the Kindle Fire will cost $199, less than half that of the iPad 2. To measure potential demand for the Amazon Kindle Fire, we asked consumer respondents how likely they would be to purchase one when it becomes available.

Amazon's new "Kindle Fire" tablet device will become available on November 15th. The Kindle Fire will cost $199 and features a 7-inch touch screen, high resolution color display, Wi-Fi, Silk cloud-accelerated web browser, 8 hours of battery life, and a USB port in addition to eReader functionality.

How likely is it that you will buy a new Amazon "Kindle Fire" tablet for yourself or someone else when it becomes available?

A total of 4% say they’re Very Likely and 12% Somewhat Likely to buy a Kindle Fire when it becomes available. Another 1% say they’ve Already Pre-Ordered one.


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ChangeWave Research: Consumer SpendingPrice is the key factor driving demand for the Amazon Kindle Fire, with nearly three-in-four (72%) likely buyers saying it is the main reason they’ve decided to buy the Kindle Fire, rather than a different tablet device.

Potential Impact on Other Products. We asked respondents who said they were Very or Somewhat Likely to buy a Kindle Fire, whether there were any other products that they had previously planned on buying but have put on hold or canceled because of it.

Looking at the following list of products, are there any that you had previously planned on buying but have put on hold or canceled because you plan on purchasing the new Amazon Kindle Fire tablet? (Check All That Apply)

Among likely Kindle Fire purchasers, one-in-four (26%) say they put on hold or canceled plans to buy an Apple iPad, and 9% say they put on hold or canceled plans to buy an Amazon Kindle eReader.

We’ll be taking a closer look at the Amazon Kindle Fire in our November consumer spending survey.

Consumer Expectations and Confidence

Respondents were asked their impressions of the economy, and while things are still rough, consumer expectations and confidence have managed to improve for the second survey in a row.

Consumer Expectations. More than half of all respondents (52%) believe the overall direction of the economy is going to worsen over the next 90 days, but that’s still a 9-pt improvement since September. One-in-ten (10%) think the economy is going to improve – 2-pts better than previously.


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Stock Market Confidence. Although only 12% say they are More Confident in the U.S. stock market than they were 90 days ago and 63% say they’re Less Confident, that’s a net 6-pt improvement from last month.

We also asked respondents about their investing plans going forward, and find that the rate of money outflow from U.S. Stocks (-13; up 4-pts) has subsided somewhat since September, but the rate of money outflow from Non-U.S. Stocks (-12; down 3-pts) has actually accelerated since the previous survey.

Underlying Reasons

The survey shows the continuation of trends that have resurged since June. More consumers are reporting they’re spending less because they’re Saving More Money (32%; up 2-pts). Reducing Debt (29%; unchanged) also remains a top reason for spending less.


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We’re also seeing an increase in job loss fears. One-in-three (33%) now report they worry about someone in their family losing their job – 3-pts worse than last month.

Of course, the biggest reason of all for less spending is Reduced Income (40%; up 4-pts). While the numbers remain worrisome, they remain considerably better than a year ago at this time.

Bottom Line: Our October survey of U.S. consumers shows the overall spending outlook continues to hold steady, even as a handful of spending categories are showing signs of an uptick – led by a surge in consumer electronics spending.

Areas showing slight improvement include travel, autos, and durable goods. Among retailers, Amazon (AMZN) looks best positioned to outperform going forward. Nonetheless, as we near the critical holiday season, there are still few signs the U.S. will experience the growth rate for the holidays that it did a year ago.


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Summary of Key Findings

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.


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Consumer Confidence and Expectations Rise in OctoberConsumer Expectations While only 10% believe

economy will improve over next 90 days – that’s up 2-pts since September

52% think it will worsen – but that’s a 9-pt improvement

Stock Market Confidence 12% say they’re now More

Confident in the U.S. stock market and 63% Less Confident – a net 6-pt improvement from last month

Reasons Given for Spending Less Reduced Income (40%; up 4-

pts) is still top reason Save More Money (32%; up

2-pts) Reduce Debt (29%; unch)

Early Look at Spending for Holidays Holiday buying plans appear

slightly below those of a year ago

Brick and Mortar Retailers Mostly Unchanged Although Costco Shows Signs of Momentum Costco up 2-pts from

September survey

But Amazon Outperforms Amazon is online retailer

with most momentum – 20% say they’ll spend more there, up 5-pts in 3 months

Home Entertainment Shopping Amazon (41%) – up 3-pts,

also leads in home entertainment market

Apple (20%) – remains at all-time high for a ChangeWave survey, unchanged from last month

Losers Best Buy (31%) unchanged

– remains at all-time low

Overall U.S. Consumer Spending Holds Steady for October 22% say they’ll spend More

Money over next 90 days than they did a year ago – down 1-pt since last month

38% of U.S. respondents say they’ll spend Less Money – the same as previously

Individual Categories Consumer Electronics (+6)

surges approaching the holidays

Travel/Vacation (+2) Automobiles (+2) Durable Goods (+1) Restaurants (-1) Household Repairs/

Improvements (-3) showing weakness this month


Table of ContentsSummary of Key Findings.............................................................................................9

The Findings.................................................................................................................11

(A) Overall U.S. Consumer Spending........................................................................11

(B) Individual Spending Categories...........................................................................13

(C) Early Indications on Holiday Spending................................................................16

(D) Retailer Trends....................................................................................................17

(E) Home Entertainment and Online Shopping.........................................................19

(F) Consumer Expectations and Confidence.............................................................25

(G) Underlying Reasons for Downturn......................................................................27

(H) Impact of the Economy on Investors...................................................................30

ChangeWave Research Methodology........................................................................31

About ChangeWave Research....................................................................................31

About The 451 Group...................................................................................................31


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The FindingsIntroduction: After a six month slowdown, spending improved slightly in last month’s ChangeWave survey – but a brand new survey of U.S. consumers shows the outlook simply holding steady for October. ChangeWave Research is a division of The 451 Group.

The October 3-14 survey of 2,603 U.S. consumers does point to an uptick in a handful of spending categories – led by a surge in consumer electronics – and including travel, autos, and durable goods. Among retailers, Amazon (AMZN) looks best positioned to outperform going forward.

The survey also picked up a slight improvement in consumer expectations and confidence. That said, as we approach the critical holiday season, there are few signs the U.S. will experience the growth rates in spending that it did one year ago.

(A) Overall U.S. Consumer SpendingA total of 22% of U.S. respondents say they'll spend more over the next 90 days than they did a year ago – 1-pt worse than our previous survey in September. While 38% say they'll spend less – that’s unchanged from previously.

Would you say your overall spending over the next 90 days will be more than last year, less than last year, or the same as last year?

Current SurveyOct ‘11

Previous Survey Sep ‘11

PreviousSurveyAug ‘11

PreviousSurveyJul ‘11

PreviousSurveyJun ‘11

Previous

SurveyOct ‘10

PreviousSurveySep ‘10

More Spending Than Last Year

22% 23% 23% 29% 32% 26% 26%

Less Spending Than Last Year

38% 38% 40% 34% 31% 35% 35%

Spending Will Remain the Same as Last Year

38% 37% 35% 36% 35% 38% 38%

Don't Know 2% 2% 2% 2% 1% 1% 1%


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ChangeWave Research: Consumer SpendingPutting These Findings in Context. After last month’s improvements, the following chart shows consumer spending holding steady for October. But in the crucial weeks leading up to the holidays our findings have yet to show signs of the overall surge in consumer spending that many retailers are banking on.


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(B) Individual Spending Categories

Which of the following consumer items will you be spending more money on over the next 90 days compared to last year? (Check All That Apply)

CurrentSurveyOct ‘11

Previous Survey Sep ’11




PreviousSurveyOct ‘10


Household Repairs/ Improvements

29% 31% 31% 31% 36% 31% 32%

Travel/Vacation 22% 20% 24% 29% 32% 23% 23%Consumer Electronics 18% 14% 15% 13% 15% 18% 17%Healthcare Services 13% 13% 12% 13% 12% 14% 14%Durable Goods for the Home

12% 11% 10% 11% 13% 12% 12%

Restaurants/Everyday Entertainment

9% 9% 10% 12% 13% 12% 11%

Automobile Purchase 7% 6% 6% 7% 6% 6% 6%Children's Services (e.g. camp, education, lessons, other activities)

7% 8% 7% 8% 8% 8% 9%

Other Services (e.g. adult education, fitness activities

4% 4% 4% 3% 4% 5% 5%

And which of the following consumer items will you be spending less money on over the next 90 days than last year? (Check All That Apply)


Previous SurveySep ‘11




Previous

SurveyOct ‘10



Restaurants/Everyday Entertainment

34% 33% 33% 31% 31% 33% 30% 28%

Consumer Electronics 32% 34% 34% 32% 31% 30% 32% 31%Travel/Vacation 30% 30% 31% 28% 27% 29% 30% 28%Durable Goods for the Home

25% 25% 26% 24% 24% 25% 24% 25%

Automobile Purchase 21% 22% 22% 20% 21% 21% 22% 21%Household Repairs/Improvements

16% 15% 16% 16% 15% 16% 16% 16%

Children's Services (e.g. camp, education, lessons, other activities)

8% 8% 8% 9% 9% 7% 9% 8%

Other Services (e.g. adult education, fitness activities)

8% 9% 9% 9% 9% 9% 9% 10%

Healthcare Services 6% 7% 7% 7% 7% 8% 7% 8%


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ChangeWave Research: Consumer SpendingChange in Net Difference Score - Current Survey (Oct 2011) vs. Previous Survey (Sep 2011)

Current Survey

Net Difference

Score(Oct ’11)

Previous Survey

Net Difference

Score(Sep ’11)

Change in Net

Difference Score

Consumer Electronics -14 -20 +6Travel/Vacation -8 -10 +2Automobile Purchase -14 -16 +2Durable Goods for the Home -13 -14 +1Healthcare Services +7 +6 +1Other Services (e.g. adult education, health and fitness activities)

-4 -5 +1

Restaurants/Everyday Entertainment -25 -24 -1Children’s Services (e.g. camp, education, lessons, other activities)

-1 0 -1

Household Repairs/Improvements +13 +16 -3

Individual Spending Categories. At the individual category level, consumer electronics spending going forward has suddenly caught fire – much of it likely related to new product releases from Apple and the upcoming release of an Amazon tablet. In addition, a handful of other spending categories are showing a slight uptick.

Consumer Electronics leads going forward, with 18% saying they’ll spend more on electronics over the next 90 days – a major 4-pt surge. While 32% say less, that’s also 2-pts better than last month.

In other findings, spending on Travel and Automobiles are each up 2-pts this month. Moreover, Consumer Durable Goods is registering a slight 1-pt uptick.

On the downside, Restaurant spending (down 1-pt) is still not showing signs of an uptick.


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And after a brief improvement last month, spending on Household Repairs/ Improvements has declined 3-pts for October.


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(C) Early Indications on Holiday Spending

An early reading on consumer holiday shopping shows spending intentions are down slightly compared with last year.

Only 4% say they’ll Spend More Money on holiday shopping this season and 25% Less – a net 5-pts worse than the reading we saw a year ago in our October 2010 survey (when 6% said More and 22% Less). Respondents also report they’ll be buying gifts for fewer people.

Importantly, it’s still early and holiday spending forecasts normally rise as we move closer to the actual season. We’ll provide a definitive forecast on spending for the upcoming holiday season in our November consumer spending report.


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(D) Retailer Trends

Major Retailer Trends

Holiday shopping is by far the most important time of the year for retailers, but with few exceptions our results are unchanged or down slightly for the major brick and mortar outlets.

Costco (COST), however, is up 2-pts and continues to lead major retailers in terms of spending growth going forward – although its improvement is below that of a year ago.

Kohl’s (KSS; up 1-pt) also shows a slight improvement.

We note that Walmart (WMT) has declined 2-pts since our September survey and is clearly not showing the U.S. market strength of previous years.


17


We want to learn more about how consumers will be spending their shopping dollars over the next 90 days. For each of the following stores, please tell us if you will be spending more money, about the same amount, or less money over the next 90 days compared with the previous 90 days.

More Money

Less Money

Net Score

Monthly Change

From Sep ‘11

Year-to-Year

Change From

Oct ‘10

Same Amount

ofMoney

No Money

Costco 10% 6% +4 +2 -2 35% 42%Kohl’s 5% 9% -4 +1 NA 30% 47%Bed, Bath, & Beyond 3% 9% -6 +1 -1 29% 51%Ross 2% 4% -2 0 0 11% 73%Sears 3% 12% -9 0 0 24% 52%BJ’s Wholesale Club 1% 2% -1 0 -1 6% 81%T.J. Maxx 3% 6% -3 0 -1 17% 63%Nordstrom 2% 6% -4 0 -1 13% 70%Sam’s Club 4% 5% -1 0 -2 20% 61%K-Mart 1% 7% -6 -1 0 15% 67%Dillard’s 0% 4% -4 -1 -1 10% 75%Macy’s 4% 11% -7 -1 -1 25% 53%JC Penney 2% 10% -8 -1 -1 24% 55%Target 7% 12% -5 -1 -2 48% 25%Bloomingdale’s 0% 3% -3 -1 -2 4% 82%Walmart 8% 12% -4 -2 -5 50% 23%


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(E) Home Entertainment and Online Shopping

Home Entertainment. We asked respondents where they’d be shopping for home entertainment and computer networking products over the next 90 days.

Over the next 90 days, which of the following stores do you think you and your family will shop at for home entertainment and computer/ networking products? (Choose No More Than Three)







PreviousSurvey Sep ‘10

Amazon 41% 38% 38% 32% 36% 34% 32%Best Buy 31% 31% 32% 31% 33% 40% 35%Costco 21% 20% 21% 20% 21% 23% 21%Apple 20% 20% 19% 17% 17% 16% 15%Walmart 13% 12% 13% 12% 12% 14% 13%Staples 9% 9% 9% 9% 10% 8% 9%Fry's Electronics 8% 7% 8% 8% 8% 8% 8%eBay 7% 6% 6% 6% 7% 7% 7%Newegg 7% 7% 8% 5% 7% 7% 6%Sam's Club 7% 7% 7% 8% 6% 8% 7%Office Depot 6% 5% 5% 5% 6% 6% 7%Target 5% 5% 4% 5% 4% 5% 5%TigerDirect 5% 5% 6% 5% 6% 6% 5%FutureShop 3% 2% 3% 3% 3% 3% 3%Micro Center 3% 3% 3% 2% 3% 3% 3%BJ's Wholesale Club 2% 2% 2% 2% 2% 2% 2%Buy.com 2% 3% 3% 3% 3% 3% 3%Dell Online 2% 2% 2% 3% 3% 3% 4%OfficeMax 2% 3% 3% 2% 3% 3% 4%Radio Shack 2% 2% 2% 2% 2% 2% 2%Other 5% 5% 6% 6% 5% 6% 6%

Amazon is also outperforming in the home entertainment/ computer networking market, with 41% of respondents saying they’ll shop there over the next 90 days – a 3-pt uptick since September and its highest level ever in a ChangeWave survey.


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In contrast, the outlook for Best Buy (BBY) remains flat – with just 31% saying they’ll shop there for home entertainment/computer networking products going forward, unchanged from last month. Importantly, this contrasts from a year ago (Oct 2010) when we saw a major uptick in momentum for Best Buy heading into the holiday season.

We note that Apple (AAPL) remains at an all-time high in the home entertainment market, with one-in-five (20%) saying they’ll shop at Apple stores for home entertainment and computer networking products in the next 90 days.


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ChangeWave Research: Consumer SpendingOnline Shopping. We also asked respondents where they’d be spending their online shopping dollars over the next 90 days.

We want to learn more about how Alliance members will be spending their online shopping dollars over the next 90 days. For each of the following websites, please tell us if you will be spending more money, about the same amount, or less money over the next 90 days compared with the previous 90 days.

More Money

Less Money

NetScore

Changein NetScore

Same Amount

of Money

No Money

Amazon.com 20% 7% +13 +5 48% 20%eBay.com 5% 8% -3 +1 23% 56%Costco.com 4% 4% 0 0 17% 67%Overstock.com 1% 4% -3 0 8% 76%Target.com 2% 5% -3 -1 13% 71%Walmart.com 2% 5% -3 -1 14% 69%Yahoo! Shopping

0% 3% -3 -1 4% 81%

Best Buy.com 1% 9% -8 -2 13% 67%

One need only look at this month’s Online shopping results to better understand why major brick and mortar retailers are having problems garnering a bigger piece of the shopping pie.

Amazon (AMZN) continues to outperform among online retailers, with one-in-five respondents (20%) saying they’ll spend more money with the industry leader this month – a 5-pt jump from just three months ago and similar to the huge burst of momentum we saw for Amazon during the 2010 holiday sales season.

Now, we'd like to find out if you're spending at Amazon.com has changed compared to the same time a year ago. Over the next 90 days, would you say you'll spend more money at Amazon.com, less money, or about the same amount of money compared to the same time a year ago?

Current Survey Oct ‘11


More Money Than Last Year 19% 18%Less Money Than Last Year 12% 13%About the Same Amount of Money 47% 46%No Spending This Year or Last Year 17% 18%Don't Know 5% 5%

In other findings for Amazon, 19% say they’ll spend More Money there over the next 90 days compared with 12% who say Less – a 2–pt improvement compared with a year ago.


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Amazon Kindle Fire

We also took a closer look at demand for Amazon’s new Kindle Fire tablet. The Android-based tablet device is scheduled for mid-November release – in time for holiday shopping – and our survey results show it could potentially be one of the season’s hottest gift items.

Note that the Kindle Fire will cost $199, less than half that of the iPad 2. To measure potential demand for the Amazon Kindle Fire, we asked consumer respondents how likely they would be to purchase one when it becomes available.

Amazon's new "Kindle Fire" tablet device will become available on November 15th. The Kindle Fire will cost $199 and features a 7-inch touch screen, high resolution color display, Wi-Fi, Silk cloud-accelerated web browser, 8 hours of battery life, and a USB port in addition to eReader functionality.

A total of 4% say they’re Very Likely and 12% Somewhat Likely to buy a Kindle Fire when it becomes available. Another 1% say they’ve Already Pre-Ordered one.

How likely is it that you will buy a new Amazon "Kindle Fire" tablet for yourself or someone else when it becomes available?


Already Pre-Ordered Kindle Fire 1%Very Likely 4%Somewhat Likely 12%Unlikely 76%Don't Know 7%


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ChangeWave Research: Consumer SpendingWhat is the main reason why you decided to buy the Amazon Kindle Fire tablet rather than a different tablet device, such as the Apple iPad? (open-ended)


Price/Cost 72%Already Own a Kindle 6%Like the Capabilities/Features 4%Like Amazon 3%For Reading 3%Recommendations/Positive Reviews 2%Not an Apple Product 2%Other 8%

Price is the key factor driving demand for the Amazon Kindle Fire, with nearly three-in-four (72%) likely buyers saying it is the main reason they’ve decided to buy the Kindle Fire, rather than a different tablet device.

Potential Impact on Other Products. We asked respondents who said they were Very or Somewhat Likely to buy a Kindle Fire, whether there were any other products that they had previously planned on buying but have put on hold or canceled because of it.

Among likely Kindle Fire purchasers, one-in-four (26%) say they put on hold or canceled plans to buy an Apple iPad, and 9% say they put on hold or canceled plans to buy an Amazon Kindle eReader.


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ChangeWave Research: Consumer SpendingLooking at the following list of products, are there any that you had previously planned on buying but have put on hold or canceled because you plan on purchasing the new Amazon Kindle Fire tablet? (Check All That Apply)


iPad/iPad 2 (Apple) 26%Other Tablet (e.g., Galaxy Tab, Streak, Xoom, PlayBook)

12%

Traditional Kindle eReader (Amazon) 9%Laptop (non-Netbook) Computer 7%Nook eReader (Barnes & Noble) 6%Netbook Computer 5%Smart Phone 4%iPod/iPod Touch (Apple) 4%Desktop Computer 3%Sony Reader (Sony) 3%Other eReading Device 2%Other MP3/Digital Music Player 1%Apple TV 1%Don't Know 18%Other 1%We’ll be taking a closer look at the Amazon Kindle Fire in our November consumer spending survey.


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(F) Consumer Expectations and Confidence Respondents were asked their impressions of the economy, and while things are still rough, consumer expectations and confidence have managed to improve for the second survey in a row.

In your opinion, which of the following statements best describes the overall direction of the economy over the next 90 days?





PreviousSurveyJun‘11



The economy is going to improve over the next 90 days

10% 8% 9% 16% 11% 20% 17%

The economy is going to worsen over the next 90 days

52% 61% 63% 46% 51% 39% 47%

The economy is going to remain the same over the next 90 days

36% 30% 28% 37% 37% 41% 36%

Consumer Expectations. More than half of all respondents (52%) believe the overall direction of the economy is going to worsen over the next 90 days, but that’s still a 9-pt improvement since September. One-in-ten (10%) think the economy is going to improve – 2-pts better than previously.


25

ChangeWave Research: Consumer SpendingAre you now more or less confident in the U.S. stock market compared to 90 days ago?





PreviousSurveyJun‘11

Previous

SurveyOct ‘10


More Confident Than 90 Days Ago

12% 7% 7% 13% 7% 23% 11%

Less Confident Than 90 Days Ago

63% 64% 70% 50% 60% 37% 50%

No Change 22% 25% 20% 35% 29% 35% 36%Don't Know 3% 4% 3% 3% 2% 5% 4%

Stock Market Confidence. Although only 12% say they are More Confident in the U.S. stock market than they were 90 days ago and 63% say they’re Less Confident, that’s a net 6-pt improvement from last month.

Other consumer indicators echo the slight improvement from the survey:

Looking back at where you thought the economy was headed 3 months ago, would you say the current state of the economy is better than you thought it would be, about the same, or worse than you thought it would be?






Previous SurveyOct ‘10


Better Than I thought it Would be 3 Months Ago

5% 4% 3% 10% 7% 18% 9%

About the Same 37% 31% 29% 47% 46% 53% 48%Worse Than I thought it Would be 3 Months Ago

57% 64% 68% 43% 46% 29% 43%


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(G) Underlying Reasons

The survey shows the continuation of trends that have resurged since June. More consumers are reporting they’re spending less because they’re Saving More Money (32%; up 2-pts). Reducing Debt (29%; unchanged) also remains a top reason for spending less.

Of course, the biggest reason of all for less spending is Reduced Income (40%; up 4-pts). While the numbers remain worrisome, they remain considerably better than a year ago at this time.


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ChangeWave Research: Consumer SpendingHere’s the complete breakdown of reasons given by consumers who say they are spending less:

For those who will be spending less than last year, what are the most important reasons why? (Choose No More Than Three)

Reasons Given By Respondents Spending Less


PreviousSurvey Sep ‘11






Cost of Living/InflationInflation/Increase Cost of Living 37% 37% 43% 39% 43% 19% 17%Higher Energy Costs 15% 20% 24% 26% 33% 8% 9%Medical Expenses 12% 10% 10% 10% 10% 11% 12%Education Expenses 7% 7% 7% 6% 5% 9% 8%Trying to Improve Personal FinancesReducing Debt 29% 29% 26% 25% 26% 37% 34%Saving More Money 32% 30% 29% 25% 22% 32% 33%Investing More Money 7% 8% 8% 6% 8% 8% 10%Big Ticket Purchases/ExpensesHome Improvement Expenses 10% 9% 10% 9% 11% 10% 9%Recent Purchase of Big Ticket Item(s) 8% 8% 8% 8% 7% 8% 8%Purchased New Home 2% 2% 3% 1% 2% 2% 2%Mortgage/Home Equity CostsMortgage Payment Increased 2% 3% 3% 3% 3% 4% 3%Home Equity Loan Payment Increased 1% 1% 1% 1% 1% 1% 2%OtherReduced Income 40% 36% 36% 39% 36% 47% 45%Value of Home Decreased 11% 10% 11% 10% 13% 12% 13%Traveling Less 11% 8% 9% 12% 9% 8% 9%

We’re also seeing an increase in job loss fears. One-in-three (33%) now report they worry about someone in their family losing their job – 3-pts worse than last month.


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ChangeWave Research: Consumer SpendingHow much do you worry that you or someone in your family may lose their job because of layoffs, closings, downsizing or other company cutbacks? Do you worry about this a great deal, quite a bit, only a little or not at all?








A Great Deal 10% 8% 9% 8% 10% 12% 11%Quite a Bit 23% 22% 22% 22% 20% 20% 22%Only a Little 46% 44% 43% 45% 45% 43% 41%Not At All 20% 24% 25% 25% 25% 25% 24%


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(H) Impact of the Economy on Investors

We also asked respondents about their investing plans going forward, and find that the rate of money outflow from U.S. Stocks (-13; up 4-pts) has subsided somewhat since September, but the rate of money outflow from Non-U.S. Stocks (-12; down 3-pts) has actually accelerated since the previous survey.

In light of recent events, will you be investing more money or less money going forward in each of the following vehicles?

Here’s the complete breakdown:

MoreMoney

LessMoney

NetScore

Changein NetScore

Same Amount

of Money

NoMoney

U.S. Stocks 13% 26% -13 +4 43% 14%CDs (Certificates of Deposit) 3% 5% -2 +2 12% 68%Equity Options 7% 8% -1 +1 17% 57%Money Market Funds 8% 10% -2 +1 31% 40%Index Options 4% 6% -2 +1 13% 66%Mutual Funds 3% 11% -8 +1 31% 45%Going to Cash 23% 7% +16 0 33% 25%Real Estate 8% 6% +2 0 19% 57%Bonds 5% 9% -4 0 24% 51%High-Yield/Income/ Dividend Focused Vehicles

19% 4% +15 -1 25% 42%

Short-Side Investments (stocks, ETFs, etc.)

14% 5% +9 -1 16% 55%

Currencies 3% 3% 0 -2 12% 70%Gold 16% 6% +10 -3 22% 47%Other Commodities 9% 7% +2 -3 19% 54%ETFs 10% 12% -2 -3 33% 37%Non-U.S. Stocks 9% 21% -12 -3 34% 27%


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ChangeWave Research Methodology

This report presents the findings of a recent ChangeWave survey on consumer spending patterns. The survey was conducted between October 3 – 14, 2011. A total of 2,603 U.S. respondents participated in the survey.

ChangeWave's proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members.

The Research Network is assembled from senior technology and business executives in leading companies of select industries. More than half of members (53%) have advanced degrees (e.g., Master's or Ph.D.) and 91% have at least a four-year bachelor's degree.

The business and investment intelligence provided by ChangeWave provides a real-time view of companies, technologies and business trends in key market sectors, along with an in-depth perspective of the macro economy – well in advance of other available sources.

About ChangeWave ResearchChangeWave Research, an independent division of The 451 Group, is a survey research firm that identifies and quantifies change in corporate buying & business trends, telecom trends, and consumer spending & electronics trends.

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

ChangeWave delivers its products and services on the Web at www.ChangeWaveResearch.com.

ChangeWave Research does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.

About The 451 GroupThe 451 Group is a leading technology-industry analyst company focused on the business of enterprise IT innovation. The company's analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. The 451 Group is headquartered in New York, with offices in key locations, including San Francisco, Washington, DC, London, Boston, Seattle and Denver. For additional information on The 451 Group, go to: www.the451group.com.

For More Information:ChangeWave Research Telephone: 301-250-23637101 Wisconsin Ave. Fax: 301-926-8413Suite 1350 www.ChangeWaveResearch.comBethesda, MD 20814 [email protected]


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