A cloud of gloom descended over consumers in the Buffalo Niagara region at the end of last year.
A new survey released today by researchers at Siena College found that local consumers were less willing to spend on major purchases last fall than they were at any time during the last two years. The sudden turnaround in consumer confidence abruptly ended a slow, but steady improvement in sentiment that had taken place since consumers finally started feeling better about spending in the summer of 2010.
“People feel as though they’re treading water,” said Don Levy, the director of the Siena Research Institute, which conducts a quarterly survey of consumer confidence in New York’s major cities. “We have highly tempered optimism.”
The uncertainty and fears of higher health care costs under the federal health care reforms weighed on consumers, Levy said. And while unemployment has been trickling lower, the pay of many workers hasn’t been growing, forcing them to watch their spending more carefully as prices continue to rise slowly.
“We don’t hear from many New Yorkers saying they’re making more money than they were a year ago,” Levy said. “I think we’re getting economically frustrated.”
As a result, consumer confidence took an abrupt turn for the worse during the final three months of last year, dipping to their lowest levels since the fall of 2011.
And Buffalo wasn’t alone in feeling a new sense of gloom. Only consumers in Long Island were more upbeat about spending during the fourth quarter among the nine major New York metropolitan areas included in the Siena survey.
What really weighed on Buffalo’s overall consumer confidence, which was the sixth-highest in the state, was a big drop in the willingness of local consumers to spend during the fall, when their optimism about future spending also weakened, but by a much smaller amount. The willingness of Buffalo Niagara consumers to spend now plunged by 14 percent, dropping the region from being the most willing to spend during the summer among New York metro areas to sixth during the fall.
The plunge left confidence levels 9 percent lower than they were a year ago, wiping out all of the improvement in consumer sentiment that had taken place over the past year. Heading into the fall, local consumer confidence had increased for three straight quarters and was about 4 percent higher than it had been at the end of the previous summer.
The fall swoon left the region with a consumer base where the number of people who are pessimistic about their buying plans outnumber those who are optimistic by about 11 percent. And confidence levels here still are 12 percent lower than the national average.
The survey of 400 consumers measures their willingness to spend on a wide range of items, from vehicles and furniture to computers and home improvements.
Among other upstate cities, sentiment levels fell the most in Buffalo and Binghamton, while they improved slightly on Long Island.
The survey also continues to show a wide gap between the current buying plans of local consumers and their plans for future spending. While consumers in Buffalo Niagara ranked sixth statewide on their willingness to spend both now and in the future, sentiment levels locally are about 11 percent lower for the future than they are for now.