Americans keep on spending
KAI RYSSDAL: From Target to Ann Taylor to J.C. Penney, consumers were buying, buying, buying last month. Most retailers reported higher-than-expected sales for May this morning. But Marketplace's Amy Scott reports those numbers might not stand up to a closer look.
AMY SCOTT: To look at the latest retail figures, you'd think consumers hadn't even noticed what they're paying at the pump these days.
JOEL NAROFF: Despite all the complaining, people are still getting into their cars, they're driving to the malls and the stores and they're still buying.
Joel Naroff is Chief Economist at Commerce Bank. He says who's buying, though, and what say a lot about the state of the economy. Chains like Nordstrom, Ann Taylor, and Abercrombie and Fitch are doing great. But their customers tend to earn more than say Wal-Mart's. The company says its customers shopped less often last month, to save money on gas. They also tended to buy in spurts around payday. Retail consultant Howard Davidowitz says it doesn't bode well for the economy that so many people live check to check.
HOWARD DAVIDOWITZ: That's most of America. These folks are borrowed up, they have no savings, a lot of them don't even have bank accounts. Those people are hurting.
Davidowitz expects higher energy costs to catch up with Americans in higher income brackets as interest rates rise and they run out of home equity to borrow on. But economist Mike Niemira with the International Council of Shopping Centers is comforted by his own research. He says the average family may be paying $7 to $10 more for gas every week than it did a year ago. But it's also earning about $20 more.
MIKE NIEMIRA: It doesn't mean that our worry has vanished. But as we learned in Economics 101, consumption is a function of income. And as long as income continues to be strong, then consumption will be.
We'll have a better sense tomorrow whether that trend will continue. That's when the Labor Department reports May unemployment figures.
In New York, I'm Amy Scott for Marketplace.