U.S. consumers: Depressed, but still spending
Consumer confidence this month dived to levels last seen in March 2009, at the depths of the recession. But some analysts are pointing to the disconnect between the talk and the walk.
“There has been a break between what consumers are saying and what they are doing over the past few months,” wrote Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities, in a research note Tuesday.
The Conference Board’s confidence index has plunged to 39.80 from 59.20 in July, “but consumer spending has continued to expand at a decent pace,” Riccadonna said. “Retail sales were up 7.9% year-on-year in September and unit motor-vehicle sales are running at the fastest pace since April.”
What about October retail sales?
“Two key metrics of same-store sales reported gains of +2.4% and +4.1% in the latest week (compared to year-ago levels), and this is consistent with further forward momentum for consumers,” Riccadonna wrote. “In short, the divergence between attitudes and spending continues.”
Let’s face it: Nobody feels good about this economy, so if asked for survey purposes it isn’t surprising that people would sound downbeat. But in many households, wallets still are open.
Interestingly enough, 45.9% of the respondents in the October confidence survey said they planned to buy a major appliance in the next six months, up from 40.8% in September.
Eleven percent plan to buy a car, down slightly from 11.1% in September. And 50% plan to take a vacation within six months, up from 46.9% in August (that question wasn’t asked in September).
The risk is that the dismal confidence report could feed on itself, encouraging more consumers to cut back whether they feel the need or not.
-- Tom Petruno
Photo: A shopper in New York this month. Credit: Paul Taggart / Bloomberg News