Consumer Nation

Consumer Is Not Dead, but Is Creeping Along

Fresh reads on the consumer this morning paint conflicting pictures about where the economy is heading.

Clothing on hangers for sale
UpperCut Images | Getty Images

On one hand, we have retail sales data. The "core" retail number, which strips out automobile sales, building materials and gasoline sales, has now shown growth in five of the last six months, with gains ranging from 0.8 percent to 0.7 percent.

While that is a positive sign that backs the notion that consumers may be feeling more confident, the latest read on consumer sentiment shows a lingering uneasiness among consumers, who continue to face high unemployment and little gain in income or home values.

Maybe the problem rests in the all-or-nothing approach some people take toward the consumer. In other words, there tends to be this thought that the consumer is either dead or spending wildly.

"There's dead, and there's creeping along," Jerry Webman, chief economist at OppenheimerFunds, said in an interview on CNBC. "You're looking at a world where demographically, financially, in terms of employment, we're not going to see what we saw during the nineties. We're going to see something that's pretty gradual. That doesn't mean that it's dead...This is ok, it just isn't spectacular."

Retail Sales: Instant Analysis

Nouriel Roubini, chairman of, said he also doesn't expect consumers to return to their free-spending ways anytime soon.

In an interview on CNBC, Roubini mentioned a conversation he had with the head of one of the largest U.S. retailers at the recent World Economic Forum in Davos.  That unnamed retailer expects retail sales will be flat in the months ahead, and plans to reduce the company's toy orders from China for next Christmas season on the expected lower demand, Roubini said.

Roubini continues to see several factors constraining job growth. For example, he said many consumers are running out of money earlier in the month than they used to, and therefore can't spend at the end of the month.

"That's the problem with the economy. There is no job creation, there is no income creation and consumption growth is anemic," Roubini said.

Digging into the retail sales report, it was encouraging to see that consumers were spending more on electronics, sporting goods, and general merchandise. But it is still possible that the trend could break in February.

There is one basic reason. Weather conditions have made it more challenging for much of the country to get out to the stores and shop. At this time of year, when spending tends to be a bit weaker, it's unlikely that those sales will be made up when consumers get to the stores.

Also, as the consumer sentiment data suggests, consumers may be getting edgy again. Certainly the market's recent volatility could be undermining the gains that some people have made in their investments and remind people of the turbulent times of the financial crisis. This isn't likely to make people want to go and out and shop, particularly when many apparel retailers featuring warm weather clothing and snow is piled high on the ground.

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