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Consumers cutting back on cutbacks
A customer with a comfortable purchase pushes his shopping cart through a Costco in San Francisco
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TEXT OF STORY
Steve Chiotakis: Retail stocks ended on an up note on Friday. But when can we expect that sunny sentiment to show up at the cash register? Here's Marketplace's Bob Moon.
Bob Moon: If only penny-pinching consumers had a little extra spending money, retail consultant Wendy Leibmann says it wouldn't take much for it to start burning a hole in their pocket:
Wendy Leibmann: You know, they've just been so locked in they feel like they've been hermits.
Liebmann heads WSL Strategic Retail. Her research is detecting an ever-so-slight shift in consumer spending:
Liebmann: They're not cutting back as much as they were -- and that's partly because they've cut back so much over the last 18 months. It's really just that the cutting back has been cut back, if you know what I mean.
That's a hopeful sign -- but there's also a discouraging sign hanging over our heads that reads "buyers beware:"
Liebmann: One in three tell us that they are very concerned about themselves or somebody in their family losing a job in the near future. So there is that real, it's not even underlying concern, it's really a fundamental concern.
And the rise in gas prices is diverting what might otherwise be extra spending money.
So in spite of subtle shifts in some consumer confidence surveys, Liebmann says it could take some time for that wishful thinking to really register.
In Los Angeles, I'm Bob Moon for Marketplace.
Since post bubble debt financing is nothing like pre bubble it's hard to see that good news on consumer spending will be more than just that until private balance sheets are rebalanced. Recession prolongs that. The government's fiscal stimulus ameliorates recessionary effects in aggregate, it does not stop the recession. U.S. monetary policy is intended to preserve the financial system and the political donor class that created the mess even as their potential customers have shifted from consuming to saving and would not borrow any more than banks would loan.
Financial industry profits as a share of U.S. busniness profits went from 8 percent in 1980 to 43 percent by 2006. If regulatory reform returns it to pre 1980 levels where is the growth going to come from to drive consumer spending?
