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Consumers to Stay 'Gloomy' Till December: Economist
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CNBC.com Writer
Consumer spending is likely to remain depressed possibly into December, as worries persist about jobs and income, Ken Goldstein, chief economist of the Conference Board told CNBC Tuesday.
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“The back-to-school sales in August are probably not going to be all that great,” added Goldstein, whose responsibilities include analyzing current trends in labor market activity for the industry group the Conference Board.
“It’s a harbinger of what we are likely to see this holiday season. This is a gloomy consumer. There’s nothing lifting this gloom—and it’s not going to over the next few months.”
Consumer confidence dropped in July to 50.4 compared to 54.3 in June, according to the Conference Board’s Consumer Confidence Index released Tuesday.
Expectations lost steam and "availability of job availability weakened a bit," according to research from Goldman Sachs [GS
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]. Specifically, noted the Goldman report, the difference between those saying jobs are abundant and that they "are hard to get" fell by 2.3 points—its lowest level since March.
The Conference Board's Goldstein said that now, the anniversary of this recession's end, consumer sentiment is lagging—more in tune with where it usually stands mid-recession.
“I think CEOs are no different than Mr. and Mrs. Jones who shop at Wal-Mart [WMT
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],” said Dan Veru, executive VP and CIO of Palisade Capital Management.
“They have to feel more confident in the economy for them to spend. In their case, spending is on plant and equipment and hiring more people back."
Veru oversees all of Palisade’s investment strategies involving publicly traded securities.
Goldstein said upbeat earnings from companies are largely due to their making money by cutting costs.
“If they aren’t making that money,” said Goldstein, “where are they going to get the money to pay the new worker? That’s the concern. [It’s] Not only to pay for new workers, but to pay a wage increase.”
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