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Coupon indicator points to slower consumer spending

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Betsi Fores
The Daily Caller News Foundation

A spike in coupon use may mean trouble is on the economic horizon, according to Coupons.com CEO Steven Boal. His website tracks the clipping and redemption of coupons, and according to their “Internet Coupon Index,” activity has not been this high since before the 2007 recession.

According to Boal, the higher the index level, the more consumers are tightening their belt. “This pattern is almost identical to the one that played out right before the last major economic downturn,” CNBC reports.

“The index tends to run in a range,” he explained to CNBC. “In September, October, November in 2007, it popped out of its range for the first time… And, for the first time since then, we are seeing a tripping out of the range,” Boal, a former Wall Street executive, elaborated.

The index also tracks what kinds of coupons people are using. Most recently, the most popular ones include soup, cheese, rice, pasta and M&Ms.

“When people are feeling tightened, they seek comfort food,” Boal said. “But, also things that make them feel better from personal care and beauty. Dove soap, Pantene and Vidal Sassoon are trending right now.”

Consumer shopping patterns have changed significantly since the last recession. The latest index by Coupons.com shows that even those least affected by the last recession have also started to rein in spending.

“It indicates to us that people are feeling particularly anxious right now,” Boal said. “As we headed into 2013, I really didn’t expect this indicator to stand up.”

The end of the payroll tax holiday has many consumers lowering their levels of spending. A recent survey by the National Retail Federation found seven in ten Americans plan on adjusting their spending plans to manage the payroll tax changes. Of those polled, almost half said they plan to comparison shop more often as well.

Still, other experts offer less dire assessments of the future of the economy.

“We are starting to see the impact of higher taxes, but we have a positive wealth effect from increasing house prices and a boost from equities,” Robert Dye, chief economist at Comerica, told Reuters following the news retail sales grew just 0.1 percent in January.

“My expectation is that consumers are able to continue to increase spending but only moderately,” Dye said.

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