A new Morgan Stanley AlphaWise Consumer Survey reveals a split in U.S. household attitudes toward the economy and discretionary spending. In April, consumers grew more pessimistic about the broader economy while at the same time expressing greater willingness to spend on consumer electronics over the medium term.
The survey reported that a net 18% of Americans expect the economy to worsen over the next six months, a reading that is one percentage point lower than in March and places sentiment near a two-year low. Personal financial outlooks were also muted, with only a net 12% of respondents anticipating an improvement in their own finances.
Despite the deterioration in overall economic sentiment, households signaled a lift in medium-term spending intentions for consumer electronics. The net figure for planned electronics spending over the next six months rose by 7 percentage points from the prior month to -10%, indicating that fewer consumers plan to cut back on electronics purchases. The improvement in six-month spending intentions was broad-based across both lower- and higher-income groups, the survey found.
Near-term indicators presented a less optimistic picture. One-month forward expectations for electronics and PC purchases fell, suggesting weaker immediate demand. Morgan Stanley noted this short-term softness reflects normal seasonal weakness compounded by economic uncertainty.
Analysts who reviewed the survey highlighted that the observed divergence between worsening macroeconomic sentiment and improving medium-term spending intentions is unusual, given the historic correlation between the two measures. The report emphasized a lagged relationship between sentiment and spending, warning that the recent drop in sentiment could translate into weaker spending intentions in coming months.
Geopolitical tensions also emerged as a notable influence on consumer attitudes: 29% of respondents identified global conflicts as a top concern for the year, a level the survey characterized as elevated relative to prior periods.
Morgan Stanley cautioned that continued geopolitical uncertainty and macroeconomic volatility are likely to keep both sentiment and spending intentions in flux in the near term. The firm warned that this variability poses challenges for companies in consumer electronics and the broader IT hardware sector.
Takeaway: The survey paints a mixed outlook for demand in electronics and IT hardware - medium-term spending intentions have improved even as immediate purchase expectations and economic sentiment have softened, and geopolitical worries add an additional layer of uncertainty.