FDU PublicMind - January 19, 2006 Release

2006 Report on New Jersey Consumer Intentions

According to the most recent annual New Jersey consumer poll by Fairleigh Dickinson University's PublicMind and the Silberman College of Business, 42% of respondents expressed bullish sentiments on their financial future, a drop-off from the 52% who were bullish last year. Conversely, about 30% of respondents indicate that they are likely to experience a deterioration in their finances a year from now, a jump from last year when only 19% of respondents expressed that kind of pessimism. Along similar lines, a majority (43%) believe that business conditions will improve in the Garden State, while 27% think business conditions will deteriorate over the next year.

“The past 12 months reflect somewhat toughening times for the New Jersey consumer when compared to the preceding period,” according to James Almeida, Chair of the Department of Marketing and Entrepreneurial studies at the Silberman College of Business. “While their economic picture did not change dramatically during 2005, their enthusiasm about future prospects for their financial position and for business conditions in the state has been tempered by the events of the past year,” added Almeida.

That said, “New Jersey consumers continue to be confident,” said Almeida. “But the economic and political events of the past twelve months appear to have eroded that confidence. Two of five of those who say they'll be worse off financially next year say the country is “off on the wrong track” and even a plurality of those who say they'll be better off financially next year agree that the country is “off on the wrong track.”

Among other findings of the study,

Family pricing runs its course! 28% of respondents purchased or leased a new car last year but only one in six expect to do so over the next twelve months.

It's hard to get away! Last year, 69% of consumers thought they were going take a vacation of a week or more, yet only 55% of Garden State residents actually did. Two in three residents expect to do so this year.

Up where we belong! Almost every other respondent (48%) traveled by an airplane for a pleasure trip last year, and that proportion is expected to increase somewhat (to 52%) over the next 12 months.

Stock markets in a funk? One in three respondents purchased stocks outside their pension plan last year, and that percentage is not expected to increase this year.

The refinancing train has left the station! Although one in six respondents refinanced their homes in the past year, only 6% expect to do so this year.

The bubble deflates, but doesn't pop! Last year, 81% of New Jerseyans expected housing prices to increase in their neighborhood. This year, however, that number fell to 55%. Twenty-eight percent of Garden State residents surveyed expect housing prices to decrease this upcoming year.

Watch that plastic! Although last year only 10% of respondents expected the unpaid balances on their credit cards to increase, 23% experienced it. This year, only 6% say they will increase the amount they owe on credit cards. One in four respondents expressed at least some difficulty in paying these balances.

Older New Jersey residents are having a hard time financially. Forty-one percent of state residents age 55-64 and 38% age 65 and over believe they are worse off financially than they were a year ago.

The annual consumer study by Silberman College and PublicMind also produces two composite indicators of economic activity. This year's composite number of Consumer Intentions (prospective)—what consumers think they will do—is 41, a slight decline from 45 the previous year but consistent with the corresponding index for 2004. This year's composite number of past performance (retrospective)—what consumers actually did—is 40 and represents a divergence from what consumers last year said they would do (45) but is consistent with the retrospective index for 2004 (41).

“This discrepancy between consumer intentions and their actual performance for 2005 is consistent with an underlying pessimism that some New Jersey residents expressed regarding the future of their personal finances and NJ business conditions” states Caroline Muñoz, Assistant Professor of Marketing

Consumer optimism is stronger among males as well as those in the 18–54 age group. While Republicans as a group were only marginally more sanguine than Democrats or Independents about their future economic prospects, it is clear that their experience in the past twelve months significantly varied from their expectations

While many New Jerseyans are confident about their economic outlook, things don't always pan out. Last January, 52% said they thought their financial condition would improve but in this year's study only 35% reported that it did improve. Conversely, while only one in five expected their condition to deteriorate, 35% reported that it did.

“In some ways, 2005 was a ho-hum year for consumers with almost two in three respondents reporting that their financial condition either improved or remained the same,” said Almeida. “However, the future appears somewhat murkier than last year, and while a clear plurality expects their financial conditions to improve, their confidence has been tempered by the uncertainties that lie ahead.”

This caution also extends from personal finances to the general business climate. While about two in five Garden Staters expect business conditions will improve in the state, 27% believe that business conditions will deteriorate, a slight increase from last year. This confidence is typical across most demographic categories but is particularly strong among younger residents. “This confidence reflects the improving labor market,” said Almeida, who also noted that “fewer than one in three respondents report that they personally know somebody who lost a job in the past year compared to last year when nearly 4 in 10 respondents knew somebody who lost a job.”

The survey of 827 randomly selected adults throughout New Jersey who participate in their household's financial decisions was conducted from January 3 through January 10 and has a margin of error of +/- 3.4% percentage points. The project was underwritten by the Silberman College of Business.

Poll Analysis

Contacts:

James Almeida: 732-754-5461 or Caroline Munoz: 973-443-8093

Radio actuality line: (201) 692-2846.

For more information, please call (201) 692-7032.