Comment on U.S. Bureau of Census Retail Sales Report: Kathy Bostjancic, Director of Macroeconomic Analysis, The Conference Board

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Nov 20, 2013, 10:19 ET

NEW YORK, Nov. 20, 2013 /PRNewswire/ --

Spending Remains Selective and Need-Driven, Heading into the Holiday Season
Consumers are winding down deleveraging (paying off old debt), and aggressive discounting incentivized consumers to modestly boost spending on core retail sales. Job and income growth have been disappointing and the recent government shutdown helped erode confidence that the economy was about to turn more robust, in turn keeping a lid on sales activity. Moreover, vehicle replacement, the one bright aspect of the consumer market, is slowly losing a little steam. The sales performance in October is not all good news for retailers heading into the holidays, since weak wage growth implies that the personal savings rate likely dropped. Moreover, given the overhang of unintended inventory, consumer caution may force them to discount more than they had planned. What's more, there is no guarantee of an overall turn toward a more positive direction in the post-holiday period. Stock market gains favor the affluent and the upscale market. At the other extreme, little was expected anyway. So it is the consumer in the middle and the retailers marketing to them that find themselves staring at a holiday season they had hoped would be better. These hopes now appear out of reach.

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