Led by a dramatic decline in the expectations of U.S. consumers for the near future of the U.S. economy, the most recent results of the Royal Bank of Canada Consumer Attitudes and Spending by Household Index show a marked downward shift for July 2009, continuing the slide begun last month.
"Consumer confidence is resetting to the levels seen earlier this year and is likely to remain there until there is concrete evidence of a turnaround, "says RBC Capital Markets Managing Director Larry Miller.
Should those trends continue, service providers will have to worry anew that relative stability in communications and entertainment servcies markets will take a hit more pronounced than what they have seen to date.
So far, there seems to be minor damage to broadband access revenues and a growing trend to substitute prepaid for postpaid mobility. Some surveys suggest only a few percent of broadband subscribers say they actually have cut off service. A recent Strategy Analytics survey suggests 10 percent would consider reducing broadband if they had to cut somewhere.
As many as 19 percent say they would consider abandoning mobile service, though there is little if any evidence users actually have done so, at that level. Most other surveys show little if any actual termination behavior.
About 19 percent of respondents to the Strategy Analytics poll say they would consider dropping their multi-channel entertainment service, but again, actual behavior does not support moves of that scale.
Still, a prolonged "scrape along the bottom would increase pressure on consumers to move more aggressively. And the RBC survey suggests that might just be the case.
After four consecutive months of rising hopes that the economy would turn around in the next six months, the longest such increase in expectations since the launch of the index in 2002, many Americans are coming to grips with the idea that it may still be some time before things get better, Miller says.
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