During my two days reporting from the Miami area this week, I covered the gamut of stores. A Wal-Mart , a Target , a Whole Foods , a Starbucks and a slew of boutiques in the posh Lincoln Road shopping district. The one thing in common between all of the customers that we spoke with is that all were acutely aware of the housing problems in the area. The implosion of the South Florida real estate market was topic number one (challenged only by discussion of how rainy the weather has been.)
The Pantry, Winn Dixie , Macy's , Target--they've all highlighted Florida as one of their weakest markets. While I understand the arguments about the decline in perception of wealth and I've reported on the rising unemployment (though still below national average) in the area due to the fall off housing/construction jobs, I still haven't found the causal link that convinces me that this factor causes people to purchase less.
Clearly it directly impacts Home Depot and Lowe's sales because they are home improvement stores and people are buying less construction materials. I can see where the construction workers who are having difficulty finding work might have problems stretching their dollars to buy at Wal-Mart. I also give credit to the idea that when people feel confident they spend more, when they feel uncertain they spend less. Maybe perception is enough to really slam sales. That said, I think there is something else behind the falloff in the Florida retail market and the other real estate bubble states like California.
Is it simply the perfect storm of factors? Is it simply a matter of comparing very robust growth to a year of otherwise moderate sales growth? Could it be that there is something to the migrant/immigrant worker falloff theory? That these workers who came into the U.S. to work in the booming housing market now have less money to spend and less to wire home.
What do you think? Let me know!!
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