Retail Sales Declining: Consumers Cutting Back
Submitted by Businomics Blog
Consumers are definitely cutting back on their spending now, not simply reducing the growth rate of their spending.
So far the decline is small, less than one percent since the peak in November. The decline is concentrated in discretionary categories, such as automobiles, building supply, electronics, furniture and sporting goods–all stuff that we can postpone buying.
Today’s news adds to the evidence that we are currently in a recession, though the news does not yet PROVE that a recession is here. If the data were to turn upward next month, then we’d call this a “mini-cycle” or a “recessionette,” not a full blown recession. That’s why even if we’re in a recession, it isn’t always clear that we’re in one.
What to do? If you sell discretionary consumer goods, time to hunker down. If you’re telling yourself that your sector is recession-proof, you’re probably being unrealistic. Some sectors are pretty stable, such as health care and utilities, but I don’t find any that are truly recession-proof or counter-cyclical (of those with enough observations for me to be confident in my conclusions). For more detail, see my recession vulnerability assessment by industry. You may need to read the case study to make sense of the tables.
Visit 1800blogger to see all of our industry leading blogs.
Are you an investor? Have something you want to say about the economy? Register on Econoimist Blog now and get published within minutes. Before posting, it is recommended that you review our posting guidelines.
