WICHITA — One of the big unknowns in whether we really are in a recovery has been consumer spending. Consumers have been laid off or scared of losing their jobs or trying madly to pay off their bills for about a year. It makes for some pretty conservative spending habits.
That’s why this August report on chain store sales from the International Council of Shopping Centers is good news. It’s down from last August, but only 2 percent, better than the companies expected. It suggests that consumers are feeling better about life and are willing to spend. That supports retailers, which supports manufacturers. Consumer spending is 70 percent of the US economy.
Of course, this is fragile, given the massive amounts of consumer, corporate and national debt that must still be paid down. Some predict the recovery will fall back into recession next year. But, for now, let’s embrace the encouraging news.
3 Comments
I think that a rising stock market – if it continues – can help spur consumer spending. The reason: if people see their 401ks increasing in value they become more confident. That, in turn, will encourage them to spend.
Also keep in mind that savings or investments don’t lay in a vault and rot — banks plow that money into the economy too. So the investments lift stock prices directly, plus give businesses capital to develop, and then people’s improving investments encourage spending. It’s good on several levels.
Good points. Just as we went down in a ‘vicious circle’ of stock market, housing market, consumer spending, jobs all driving each other down it just might be that a cascading effect might help propel us upward.