Consumers Spooked, But Still Spending (For Now)
Retail sales are up, but economists don't expect sustained improvement
Apparently, what consumers say and what they do are two different things.
On the one hand, consumer confidence nose-dived in October to the lowest level since
But if Americans are feeling so blue about the economy and their financial situation, why are they spending more green?
The release of pent-up demand for big-ticket items such as automobiles, explains a big part of the uptick in spending, experts say. Vehicle supply chains have been restored as
"What we saw during the recession was minimal growth or sales declines [because] people were putting off big purchases," says
Gross domestic product figures came in better than expected in October, with the economy growing at an annual rate of 2.5 percent in the third quarter of 2011 according to advance estimates released by the
But while retail sales saw a big jump in September, economists don't expect the upward trend in spending to continue, at least not at the same pace. When you account for heavy losses in real disposable income, inflation, and falling savings rates, a different picture of American consumers emerges -- not one that's rushing to the mall to buy the latest gadgets, but one that's living paycheck to paycheck. "People are putting less money aside and their income gains are weak," says
Real disposable income has lost ground for three consecutive months, registering its largest quarterly drop since the third quarter of 2009. That means people have less money to put aside as savings. With prices rising -- particularly food prices -- and wages remaining stagnant, consumers are getting squeezed from virtually every angle.
"People are not splurging, they are not being frivolous. They are being frugal, they are waiting until things wear out and then they rush out to replace them," Christopher says. "Instead of buying in a constant stream, it's a little more varied, especially between durable and nondurable goods. It's more like little spurts you'll see. The whole paycheck cycle economics is very relevant right now."
Christopher says consumers should get a little more relief as gas prices are expected to fall in October, but he still doesn't expect holiday retail sales -- or consumer confidence -- to be great. "There's a fundamental economic reason: unemployment rates are high," he says, a burden that will continue to weight heavily on Americans until significant progress is made in bringing down the sky-high unemployment rate.
Available at Amazon.com:
- America's Growing Income Gap by the Numbers
- Wall Street Is Back to Its Old Tricks
- 7-in-10 Blame Economy for Hiring Freeze
- Grim Warnings for the Deficit 'Super Committee'
- Consequences of a Debt Committee Stuck in Neutral
- Is the Rising Star of U.S. Manufacturing Fading?
- Can Foreign Buyers Save the U.S. Housing Market?
- Consumers Spooked, But Still Spending (For Now)
- The Recession's Impact on Baby Boomer Retirement
- Cutting Taxes for the Rich Never Ends Well
- Secret of the Flat Tax
- Current Tax Code Is Confusing
- Flat Tax Would Eliminate 'Crony Capitalism'
- Flat Tax Would Introduce New Problems
- Flat Tax Unites Americans
- Flat Tax Unleashes Economic Growth
- Flat Tax Shifts Burden to the Middle Class
- Flat Tax Will Benefit Only the Rich
- Jobs Report Disappoints, but Unemployment Falls to 9 Percent
- Fed Stands Pat, But Signals Darker Days Ahead
- Young Adults Suffering More Financially than Older Generations
- The Perverse Side Effect of the Euro
- Equal Taxation for Wealth and Work
- Not All Taxes Have to Hurt
- GDP Up: Will Recession Fear Fade as Economy Shows Signs of Life?
- Measuring Economic Progress
- Great Recession Means a Diminished American Dream for Young Adults
- Inflation Could Help Flagging Economy
- Home Economics
- Skills Gap Plagues American Manufacturing Industry
- Beige Book Says Economic Recovery Still Slow. What Now?
- The Ranks of the Underemployed Continue to Grow
- More Americans Falling Behind On Mortgages
- Fed Created A Recipe for Disaster in Housing Market
- The Fed Caves to the Whims of Congress
- Federal Reserve is No Longer Beyond Influence
- Blame Bernanke and Federal Reserve for Economic Crisis
- Fed Saved Economy but Did Little to Rein in the 1 Percent
- For Better or Worse, Fed Is Just Doing Its Job
- Flat-Tax Fraud and Why America Needs a Truly Progressive Tax
- The Broken Contract: Inequality and American Decline
- The Wisdom of Retrenchment: America Must Cut Back to Move Forward
- Shortchanging Our Paychecks
- Unemployment Drops Sharply in October
- Recession Fears Fade But Euro Debt Crisis Still Looms
- Haves and Have-Nots: Cities with Highest and Lowest Poverty Rates
- Is the Economy Better Off Without Washington?
- How to Rein In Healthcare Costs
- Why Mortgage Rates Are Rising
- Industry Must Do its Part to Educate Workforce of the Future
- Jobs Council Issues Growth Proposals, Acknowledges Dysfunction
- September Jobs Report a Pleasant Surprise
- US Economic Woes Put China in the Political Crosshairs
- A Devalued Renminbi Makes Wealthier Americans
- Sluggish America Can Still Be a World Leader
- Behind Europe's Debt Crisis Lurks Another Wall Street Bailout
- United States - South Korea Trade Deal Win-Win for Jobs and Economy
- Obama's Trade Deal Delays Have Cost Jobs
- Reconsider Dodd-Frank, Piece by Piece
- Dodd-Frank Brings Transparency to Financial Industry
- Dodd-Frank is More Right than Wrong
- Dodd-Frank Is a Counterproductive Mess
- Repealing Dodd-Frank Would Put the Economy in Danger
- A People's History of the Great Recession
- Job Destroyers Don't Deserve Tax Holiday
- What the Recession Has Done to the Rich
- Pot Calls Kettle Risky: The Wit and Wisdom of Tim Geithner
- New Layoffs Are Harbingers of Broader Economic Changes
- Is Obama's National Infrastructure Bank the Answer on Jobs?
- We Are In a Modern-Day Depression
- Dunkin' Donuts, McDonald's Franchises Warn of Job Cuts
- Despite High Unemployment, Millions of Job Openings
- How Renters Could Save the Housing Market
- How Low-ball Appraisals Are Limiting Housing Recovery
- The Moral Question
- Rise of the Renminbi as International Currency
- United States Woos Foreign Shoppers to Boost Sagging American Economy
- How to Create More Jobs by Lowering Wages: Texas and America
- 15 Stunning Statistics About the Jobs Market
- Training Unemployed for Specific Jobs Could Solve Many Problems
- Housing Slump Will Hurt Economies Well Into Future
- Can the Government Help the Housing Market?
- Are American Consumers Relapsing Into Debt Addiction?
- Obama Deficit Plan Could Derail Hopes for Super Committee Success
- Raising Retirement Age: Reflection of Our Evolving Economy
- Why Math and Science Education Means More Jobs
- A Good Fight
- America's Government Contracting Bonanza Bilks Taxpayers
Available at Amazon.com:
Consumers Spooked, But Still Spending (For Now) | Politics
(c) 2011 Tribune Media Services, Inc.