Remember the old saying “When the going gets tough, the tough go shopping?” Well, if that’s true, then Americans have become decidedly less tough in that past few months.
Economic recovery has slowed, causing in a dip in consumer confidence, which in turn has resulted in slowing retail sales in the apparel-oriented sector. This is cause for concern for the many retailers pinning hopes on the all important Back-To-School season.
The Conference Board’s Consumer Confidence Index, which measures changes in consumer attitudes and expectations about the current and near-term economic situation, declined in June for the fourth straight month, and now stands at 62.4. Although people were somewhat upbeat about current conditions, they were slightly more pessimistic about the future. Income expectations, which had improved in May, declined in June.
Retail sales growth in the combined department, chain, discount and specialty store sector, where the lion’s share of apparel sales originate, has followed the same trajectory as consumer confidence. Although sales growth popped a bit in May, it has fallen from the February peak. Early indications from retailers are that June sales growth will be slower than May.
Consumer confidence has taken a beating from persistently high unemployment, slow job growth, and the European economy’s impact on global financial markets.
If the trend in Consumer Confidence continues, apparel spending might continue to be restrained in the short term.
