Consumers And Retail: The Paradox Of Thrift
Early reports of the death of the American consumer may have been greatly exaggerated.
The Commerce Department said August retail sales increased 0.4 percent from July (seasonally adjusted, after revisions), and sales were up 3.6 percent from August 2009. The top-line results were a bit better than expected, but sales increased 0.6 percent, excluding autos, which was double the level that analysts had predicted.
Separately, Best Buy earnings blew away consensus estimates. The interesting take-away from the report was while fewer electronics shoppers came in, those who did, ratcheted up their spending. I take this to mean that those who have jobs, are a little more secure, and allowing themselves permission to spend.
While retail sales are up 8.4 percent from the worst levels of the recession, they are still 4.3 percent below where they were prior to the onset of the recession.
Consumers have certainly cooled their jets since the beginning of the year, as sales have steadied since April. According to Gallup, consumer spending at stores, restaurants, gas stations, and online was $63 per day, down $5 per day from July and down $2 per day from a year ago.
I discussed the outlook for consumers with CBS3 this morning and the delicate balance between wanting consumers to spend in short-term vs. encouraging them to reduce debt and save over the long-term (aka "The Paradox of Thrift").
