Did Consumers Shop in August or Will It Be Empty Backpack Syndrome This Year?

Chain stores report their August sales Thursday, providing a good look at how the discouraged U.S. consumer behaved during the important back-to-school shopping period.

Matthew Staver | Bloomberg | Getty Images

August’s report of consumer confidence, earlier this week, was dreary. Confidence was at the lowest level since November, 2011, suggesting consumers have a worsening view of the economy.

One reason may be that August has also been a month of rising gasoline prices, at a national average of $3.80 per gallon Wednesday, compared to $3.48 a month ago. Gasoline has risen 5 cents this week alone, as Hurricane Isaac forced the shutdown of refineries along the Gulf Coast.

“It’s one of those watch what they do, not what they say,” said Mark Luschini, chief investment strategist at Janney Montgomery.

Thomson Reuters expects to see an increase in August same store sales of 2 percent for the stores it follows. Drug stores’ sales are expected to decline 7.3 percent, while teen apparel is expected to slide by 5.5 percent. Apparel in general is expected do the best, climbing 5 percent, followed by department stores, expected to gain 4.3 percent, according to Thomson Reuters.

“It will be interesting. We’ve seen a little bit better retail sales on the last reading we had for that,” Luschini said. “The consumer has been remarkably resilient. The savings rate has been back to four percent. Historically, it’s six percent. There’s still room for the consumer to save and deleverage, but maybe there is room for them to open their wallets a little more with the improvement in the housing market. But consumer confidence would beg to differ with that.”

Weekly jobless claims and personal income and spending are also expected Thursday, at 8:30 a.m. ET. Claims rose slightly last week ending a trend of declines. The number will be watched closely, ahead of next week’s August employment report.

Stocks meandered Wednesday in very quiet trading. The Dow was up 4 at 13,107, and the S&P rose a point to 1310. Oil fell after G-7 finance ministers called on oil producing countries to increase output. Nymex crude was at $95.49, down $0.84 a barrel, and gasoline futures fell 0.8 percent to $3.1003 per gallon.

Luschini said the stock market has been especially quiet because of the anticipation building around the Fed, first with Fed Chairman Ben Bernanke’s speech Friday at Jackson Hole and then the Fed meeting Sept. 12/13.

He also said that combined with the events expected in Europe next month is keeping investors sidelined. The European Central Bank meets Sept. 6, and a German Constitutional court rules on the European bailout fund Sept. 12.

“That to me is trumping market activity, sentiment and obviously trading, at the moment,” he said.

What Else to Watch

The state of the refining shutdowns along the Gulf Coast will continue to be monitored by energy markets, as the industry assesses the impact of Isaac.

Presidential candidate Mitt Romney speaks on the final night of the Republican convention.

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