Economic Confidence among Elites is up, but What of Spending?

The New York Times  reports that affluent consumers, whose increased spending last year was largely credited with reviving hope in the US economy, may have now entered another period of retrenchment.

In November 2009, PSB released a report  which looked at the general American population and identified a trend of increased spending among high income consumers. The headline result then was that Americans earning more than $70,000 a year planned to increase their holiday spending by 27% over the previous year, while those earning less than $40,000 a year were planning to reduce their spending by 14%.

The relative upswing in consumer sentiment forecast in our study, particularly among high income consumers, continued into the first half of 2010, and the article confirms that affluent consumers’ spending  was on the up until very recently– hence the increase in sales of Mercedes and high end properties in the Hamptons and Manhattan mentioned in the Times article.

Indeed, for some time the hopes of US retailers, and the US economy in general, have been pinned on the continuing willingness of affluent Americans to maintain or increase their spending in 2010. The latest data, therefore, is likely to leave many businesses nervous about the ongoing unpredictability of the American consumer.

The picture becomes even more nuanced when one considers today’s Politico poll, also conducted by PSB. This survey suggests that 45 percent of “Washington elites” feel the country and the economy are headed in the right direction, while only 25 percent of the general population feels that way. What is not clear, however, is how the spending patterns of Elites will be affected by these higher confidence levels.

In such a perplexing environment, companies may need to take the temperature of their customers more often than they have historically. One month of disappointing data, particularly if it emanates from higher end consumers, is proving itself able to undermine confidence everywhere, so companies should be looking to research their customers’ spending patterns, as well as their general sentiments, as often as possible.

Pew poll: more evidence of A More Social Future?

A new Pew report on the future of social networking reveals that most tech experts believe that the Internet has been a mostly positive force, but that social networks can be used in harmful ways.This view supports the findings of PSB’s own study on the growth of social media from earlier this year, entitled “A More Social Future”. 

Overall, the data clearly suggests that social media is here to stay, with 85% of respondents to the Pew survey agreeing with the prediction that by 2020 the internet will have been a mostly positive force on their social world.This chimes well with the findings of our study of the general US population, which revealed that 6 in 10 respondents, and 3 in 4 of the 18-34 year-olds we polled, believe that social media networks will become more integrated into our lives. Furthermore, 56% of the Americans we polled feel that they will make friends in the future because of social networks.

So, with such a consensus believing in the pivotal role of social media in people’s lives, which networks will build lasting, profitable business models?

One clue comes from the question we asked about social media’s impact on purchase decisions; 80% of 18-34 year olds think that recommendations received from a social media network are the same or better than recommendations from traditional methods.

The winning social media sites in the future will be those which can build an enthusiastic community of users who believe in social media as a long term concept. It is within this environment that social-context advertisements (where data is collected on the preferences of other members of the network and displayed as an effective word-of-mouth tool) can gain traction. Companies will be very keen to pay for these advertisements if they feel that the endorsements of fellow users will lead to a greater ROI.

The American Constitution Survey 2010

The American people are solidly behind the basic principles of the Constitution. But they are deeply divided as to how it should be interpreted, and they're frustrated with its current implementation. Penn Schoen Berland's June 2010 poll of 1000 Americans (presented today at the Aspen Ideas Festival) addresses their attitudes toward the past and future of the Constitution - as well as the changes they want to make to give people more power.