On your mark, get set, shop! It's that time for consumers to rush out in their turkey-filled hazes to try to score the best deals on that new set of bowls for Grandma or that TV for Junior. But will shoppers be out en force as usual, or are they planning to scale back because of a lack of consumer confidence?
The latest temperature taken of the nation's consumers suggests an already downbeat mood has taken another hit. The Conference Board's Consumer Confidence Index now stands at 70.4, the lowest level since April. It declined 2 points from October. But will these low feelings translate to lower sales for retailers despite their huge sales?
Lynn Franco, the group's director of economic indicators, thinks it might. In a statement, Franco said, "With such uncertainty prevailing, this could be a challenging holiday season for retailers." When looking six months ahead, "consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions," she continued. And overall, consumers' feelings toward the future fared worse than their feelings about the present.
It's the behavior that matters most
But there could be some sunshine behind those clouds. Even with the dour feelings on the months ahead, those kinds of thoughts don't usually stop Americans from spending. Lynn Reaser, chief economist for Point Loma Nazarene University, agrees, saying, "It is always more important to look at what consumers do as opposed to what they say."
This kind of split between sentiment and actual spending was seen in October figures. Despite the fact that consumer confidence tumbled earlier in October, retail sales were surprisingly firm.
"Clearly, everyone is feeling frustration over Washington, but in terms of their actual spending, it really depends on their personal wealth, their personal job situation and their outlook," says Reaser.
Where it might matter more
Thus far, Marshal Cohen, chief industry analyst at the NPD Group, hasn't seen sufficient reason to downgrade his forecast for "modest growth" in holiday sales. But he says these kinds of "sentiment gauges" translate best when it involves what he calls "self-gifting." As the phrase implies, this occurs when folks who are out shopping for others also purchase for themselves. He says "self-gifting has now reached at least 20 percent of the holiday business that comes from this period. During the Black Friday period it could reach numbers close to 35 (percent) to almost 40 percent of the purchases."
If people cut back on themselves because they feel economic conditions might change in the near future, Cohen says holiday sales growth overall would typically be less. We'll await next month's numbers to see how the shopping season is faring.
What about you? Do you hope to find some hot deals to buy for yourself in the coming days? Or are you planning on scaling back this year?
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