After almost a year of recession and cautious saving, Americans are starting to spend again. U.S. consumers are willing to spend more on retail goods than they were one year ago, according to a SpendingPulse report released Wednesday. Most of the retail sectors tracked by the report made solid gains from March 2009 levels but fell well short of March 2008 levels.
eCommerce, Luxury Sales Boosted
Among sectors that fared best were luxury sales (+22.7), eCommerce (+18.4%), specialty apparel sales (+5.2%) and electronics (+4.9%). The sizable growth in luxury sales could be attributed to wealthier customers’ slowing their savings. High-dollar chains such as Nordstrom, Tiffany, Neiman Marcus and Abercrombie & Fitch all posted strong sales numbers, according to The New York Times. The SpendingPulse report also pointed to the fact that the pre-Easter shopping rush happened in March as a reason for increased specialty apparel and luxury sales.
“Prices maintained their levels as inventories continued to be aligned with demand and retailers did not seem to resort to discounting in order to drive traffic during the Easter shopping season,” said Michael McNamara, Vice President of Research and Analysis for SpendingPulse.
Spending increased year-to-year across the U.S., except the Pacific Coast.
Other Positive Indicators
Other numbers pointed to increased consumer confidence and retail sales in March. Automakers such as Ford, Toyota and GM reported sales increases in March, according to the New York Times. The volume of cargo coming into major ports is expected to rise by 8% in April compared with last April, according to the National Retail Federation.
Personal consumption expenditures went up by 0.3% in February, the fifth monthly gain in a row, according to the Commerce Department. The jobs market stayed level in March, as unemployment stuck at 9.7% and 162,000 new jobs were added to the market.
Reasons for Continued Caution
Although many sectors saw robust growth compared to March 2009 numbers, they were still lower than March 2008 levels. Luxury sales, for example, rose 22.7% from March 2009 to March 2010, but March 2009 brought double-digit declines in luxury sales. Despite electronics sales rising 4.9% from March 2009, the sector is still down 4.2% compared to March 2008.
The Discover U.S. Spending Monitor, which tracks consumer confidence, fell 1.5 points in March. Families were the least confident consumers in March, as many felt economic conditions and their personal financial situations were getting worse. 42% of married couples with children at home said they expected an income shortfall in April, according to the Discover study. The Monitor reported 57% of consumers planned to keep their spending flat in April, with some planning to increase discretionary spending and spending on gas and groceries.
While consumer spending has traditionally been a harbinger for the end of a recession, some economists believe that this spending is a dangerous trend and that true, long term economic stability will only come if consumers learn to maintain a healthy balance of savings and spending, despite the apparent movement towards economic recovery.