As the U.S. economy entered into crisis mode in September, so did the retail sector, ramping up discounts and special offers to entice reluctant shoppers.
But the retailers who reported September sales results Wednesday -- with the exception of Wal-Mart Stores Inc. and other discounters -- are indicating the promotions hardly helped. Many retailers reported worse-than-expected declines, with some -- such as Target Corp. and J.C. Penney Co. --- issuing downbeat estimates for the quarter.
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For the most part, the discount sector has been the only one to perform well amid recent economic troubles. Shoppers increasingly have been turning to warehouse and big-box discounters as they try to get the most for their money. Most other sectors have been suffering as shoppers continue to pull back on discretionary items, despite retailers' efforts to lure the bargain-hungry shoppers with greater discounts.
A rise in discount sales at the expense of all other stores is a bad development. It's worse when you consider that 70% of US growth comes from consumer spending.
Consider the following charts.
The simple line chart tells us that real retail sales (inflation-adjusted) have been stalling for some time).
The year over year percentage change shows that retail sales have been dropping hard for some time.
Personal consumption expenditures -- which also include durable goods -- shows the same decline.
The bottom line is the consumer is definitely pulling in his spending.
5 comments:
I always appreciate your very well chosen graphic information. . . And when one also views the level of debt in households, and then realizes that those sources of debt are presently, shall we say, constipated, it seems almost certain that consumers everywhere will be simply repaying debt for a long time and, once again, saving much of any disposable income. With these low levels of new debt issuance even for those with good credit ratings, money is simply - literally - vanishing for the average household.
Editorial: it's rein, not reign.
To rein is to pull on the reins in order to stop a horse.
To reign is to rule, like a king does.
Hope this helps.
I went to JC Penny's this weekend becuase they were having a huge half of sale for a LOT of stuff. And it struck me as a bit alarming because it's only October and you don't usually see those kinds of sales until November or December for Christmas shopping.
It'll be an intersting Christmas season I think.
I'd like to know if you subscribe, as you seem to, to the idea that growth is always a good thing.
It seems the philosophy of a cancer cell, quite applicable to the metaphor of the economy as part of the body politic.
Why do you never speak of population control, or other means of manipulation of demand?
Are you a secret Marxist, chortling over the thoughtless acceptance of the consumer demand growth absolute paradigm?
Quite a few secret Marxists are popping up in the strangest places these days, at least according to CNBC analysts.
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