Autumn Consumer Spending on the Rise

Researchers from Georgetown University’s McDonough School of Business predict consumer spending is on the rise, after a lull in the summer and early fall. The Problem-Driven Consumption Index (PDCI) – which studies consumers’ problems to predict their purchases – suggests consumer spending will increase in October, relative to September.

“This upswing in the index corresponds with continued positive data from labor reports and continued high levels of consumer confidence, as well as consumer sentiment,” said Kurt Carlson, professor of marketing at Georgetown McDonough. “This is a potential early indication that consumer spending will continue to be strong through the holiday season.”

The index – which measures consumers’ problems that require market solutions related to transportation, housing, healthcare, and other categories – increased in October to 162.7, up from September’s 153.3 and August’s 153.1. October’s level is driven by an increase in the amount consumers were planning to spend to solve their problems. The number of problems consumers were planning to solve remained stable.

“Looking a different sectors of the economy, this month’s data stems from increases in the index related to work and life, personal care, health, transportation, finance, and attire problems,” Carlson said. “In contrast, there were decreases in the social, communication, as well as home and housing sectors.”

The PDCI, which uses non-seasonally adjusted data, remains up 17 percent year-over-year. This increase is driven by a rise in the amount they plan to spend solving their problems in the marketplace.

With more than two years of data, the PDCI predicts monthly retail spending. The index goes beyond measuring confidence or sentiment to study the problems in the marketplace and how consumers plan to solve them.

Carlson and Chris Hydock, assistant professor of research, derive the PDCI from responses to the Consumer Problem Survey (CPS). The CPS is a monthly survey of a nationally representative sample that measures consumers’ problems that require market solutions, thereby allowing the institute to track the quantity of, severity of, and the types of problems that consumers experience. By measuring and tracking the problems that cause consumers to enter the marketplace in search of solutions, the CPS provides entirely new insights into when and how consumers are likely to enter the market to solve their problems. To view the full report, visit http://bit.ly/PDCIoct16. For more information about the index, visit http://bit.ly/consumerproblems.