Week in review: Consumers are spending again!
Share Now on:
Week in review: Consumers are spending again!
Tess Vigeland: Two weeks down, 50 to go. Hope 2012 is shaping up to be a good one so far. Let’s see we had the New Hampshire primary this week, but let’s assume none of you were living in a cave and have heard the news out of that event. Congress is still on vacation. Wouldn’t we all like to have that kind of time away from the office?!
Well, let’s hear what else made news this week from our intrepid senior business correspondent, Marketplace’s Bob Moon, who joins me in studio. Howdy Bob.
Bob Moon: Hey Tess.
Vigeland: First I have to start with a story that I believe will be very close to your heart, because I’ve seen its products on your desk more than once here at Marketplace. The Twinkies bankruptcy must have you in tears!
Moon: Yeah. We covered that this week. And you know, I brought this…
Vigeland: Oh no you didn’t bring any.
Moon: Yeah. Can I interest you in a Ding Dong?
Vigeland: Don’t call me a Ding Dong!
Moon: Well, you know, people have been talking about the end of Twinkies, but I have graduated here. I discovered this morning that there is something called a “Hostess Chocodile.” And what it appears to be… Let’s…
Vigeland: A chocolate crocodile?
Moon: It appears to be a chocolate covered Twinkie. Ah… So good.
Vigeland: Please don’t eat that. Oh no, don’t eat that!
Moon: MMMM!! That’s really good. OK, so anyway, hopefully…
Vigeland: Don’t talk with your mouth full!
Moon: Hopefully, Hostess will be able to get out of bankruptcy and life will go on.
Vigeland: For you.
Moon: Mmhmm. Now, speaking of poor sales.
Vigeland: Not what happened over the last year in 2011. Record retail sales!
Moon: That’s right.
Vigeland: Bob, what recession?
Moon: Well, we had $4.7 trillion in retail sales.
Vigeland: Good Lord.
Moon: But then again, you have to think about that number, because this is a very broad gauge that the government uses. It not only pertains to department stores and grocery stores and that sort of thing. But it also includes auto dealers, it includes your trip to the gas station, it includes restaurants, it includes bars and health care costs. Our spending on health care goes into that retail number.
Vigeland: But the fact is, it still set a record last year. So we’re spending more money than ever, apparently.
Moon: And some economists told me, getting less with that money that we’re spending. So in other words, one of the reasons that number was so high was because some prices that aren’t included in the governments gauge of inflation do get included in that bottom line number for retail sales.
Vigeland: So what does this tell us of the overall health of the economy? Anything?
Moon: One economist I talked to said, if you went into this report looking for a sign that the economy was improving, you could’ve justified that. And if you went into it saying, “Well, the economy is slowing down,” you could’ve justified that. Because right at the end of December, sales really dropped off. So it appears that consumers backed off of their spending binge during the early part of the holiday season. And in fact, Wells Fargo economist Tim Quinlan told me that he has one big concern:
Tim Quinlan: There’s also some evidence that consumers really stretched in order to enable the decent holiday spending that they had.
Moon: Stretched, as in plastic.
Vigeland: Ah… Yes, lots and lots of debt. And in fact, that’s another number that we did see this week, which is that credit card usage just skyrocketed in November!
Moon: That’s right. Although, economists can also see that as a positive sing. Because that might signal that there’s increasing demand out there for goods, and also that consumers do have a willingness to spend.
Vigeland: On their credit cards.
Moon: Well, that’s right. Apparently, consumers also dipped into their savings a little bit, early in November. That’s when apparently when the holiday shopping season was frontloaded. Many consumers apparently did most of their shopping early on in November and so that’s why sales tapered off in December.
Vigeland: I guess that’s becuase there were all kinds of sales. You started seeing advertising for holiday sales even in October.
Moon: Very early, very early. Holiday sales around Halloween.
Vigeland: So just to sum up, when we look at these two figures here, is there any way to predict what that means for us going forward here in 2012.
Moon: There is some thinking that it could mean that consumers have pulled back a little bit. They’re not gonna load up their credit cards; they are trying to be a bit responsible. But on the other hand, it could mean that spending is not gonna quite as strong in 2012.
Vigeland: OK. Except for you and your spending on these Hostess Ding Dongs that you…
Moon: I’ll get back to those here… They’re really good Tess.
Vigeland: Gross. Marketplace’s Bob Moon joining us. Thanks a lot. Bon appetit!
Moon: Thanks.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
