In the ditch...
The latest consumer confidence report aside, Americans are still apprehensive, especially about their jobs, and that fear is likely to weigh on consumer spending in the months ahead, according to one retail industry consultant.
Burt Flickinger, managing director of retail consultantcy Strategic Resource Group, said the US has just entered a 500-day retail recession, and before it’s over, the US will see weaker retail sales, more store closures and even additional retailers joining Borders in bankruptcy.
Helping to drive the trend is a weak labor market, Flickinger said.
Job growth has remained elusive, pushing the unemployment rate to 9.2 percent. Flickinger also expects more people will be joining the ranks of the unemployed as state and local governments make further cuts to their budgets.
The latest consumer confidence report from the Conference Board showed consumer attitudes perked up from the prior month, but it also captured growing fears about jobs. Those fears are likely to curtail spending, especially when you consider the large numbers of households that are living paycheck to paycheck.
Flickinger also cited the long-term unemployed who will stop receiving extended unemployment benefits this year as another contributing factor. Once the checks stop arriving, these people will have even less money than they do now.
Couple these trends with sky-rocketing inflation for food and clothing as well as for gasoline prices, which are on the rise again, and you quickly see just how pinched the consumer is.