The Confident Consumer

To many a U.S. businessman and economist, one of the touchiest questions of 1958 is: Has the recession thrown a serious chill into the American consumer's mood of sunny, open-pocketed optimism? For a while last winter and early spring, it appeared that the recession indeed had, as autos, appliances and many other consumer hard goods turned down. Last week, in a report that was as heartening as it was authoritative, the University of Michigan's Survey Research Center, often called upon to test consumer attitudes for the Federal Reserve Board, reported that beneath the consumer's somewhat hesitant exterior still beats a buying heart of gold.

Despite pessimistic predictions of a new era of consumer uncertainty, the Center reports an overwhelming feeling among consumers that a real depression is impossible, detects only a slight impairment of the "underlying feelings of confidence and security which characterized the past ten years." In 1958 the U.S. consumer has merely been forced to think twice about what he buys. With one in six families reporting some joblessness in the past year, the percentage that said they were financially better off this June than a year ago was down considerably from 32% to 22%. Yet when it comes to the future, a full 30% expect to be better off a year from now v. 28% who felt that way last December. Only 10% think that they will be worse off.

On the key question of buying intentions, 70% of U.S. families have at least one big purchase they want to make--and many have more than one in the budget. The great danger, noted the survey, is that further inflation and continuing price rises may discourage future consumer buying. Compared with June 1957, when 42% were fatalistically resigned to a perpetual price spiral, only 28% of U.S. consumers now expect prices of household goods and clothing to keep on going up; the remaining 72% look for mixed movement, no change or a general decline. Thus price becomes an increasingly important factor. Concludes the survey: "Consumer desires and needs for durable goods, homes and additions or repairs to homes are [hardly diminished]. The decline in consumer spending is due to postponement of discretionary expenditures rather than to saturation."

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