Why is consumer spending up this season?
Shoppers carrying bags walk up Fifth Avenueon Black Friday November 27, 2009 in New York City. Black Friday is the traditional kickoff to the holiday shopping season, with as many as 134 million people expected to shop over the next three-days according to the National Retail Federation.
TEXT OF INTERVIEW
Stacey Vanek Smith: Full disclosure: I have not finished my Christmas shopping. Not even close, actually. But, I'm not alone. Turns out, American shoppers are procrastinating like never before.
David Lazarus is the consumer columnist for the Los Angeles Times. He joins us to talk holiday retail. Good morning, David.
David Lazarus: Good morning.
Vanek Smith: Retail sales have been pretty good this season so far. It's strange, though, that we seem to be spending again, given that unemployment is basically worse and personal income is flat. Why, since the economy's basically where it was last year, is consumer spending up so much this season?
Lazarus: Retail sales are up, surprisingly up. In fact, a lot of economists are re-crunching their numbers because they hadn't expected consumers to turn out in force like this. The first thing that I conclude is that well, people are just tired of being miserable. People have finally said, 'All right, that's it. I don't want to be Gloomy Gus all the time. I want to go out and treat myself a little bit.' And this is the season for doing that.
Vanek Smith: Like frugality fatigue?
Lazarus: Exactly! But here's the other interesting data point: about half of all Americans have put off their Christmas shopping until this week. And I know that we're a nation of procrastinators, so the fact that so many people have put it off tells me that we've also become savvier shoppers as we've come through this downturn, because people know that it's a game of chicken with retailers. The longer you wait, the chances of you getting a deep discount on that thing you want is going to happen.
Vanek Smith: I know that you do a lot of on-the-ground consumer watching, is there anything you've noticed this season just observing at malls, shopping centers, things like that?
Lazarus: Yeah, I would say that people are getting a little leerier of these extended warranties that get pushed on people. Businesses have been very aggressive with that and there's a good reason for that: there's an 80 percent profit margin. At least that's what the experts tell me for these extended warranties.
Vanek Smith: I know that at some stores they're offering them for small things like headphones, everything they'll offer you a -- I bought a mouse, they tried to sell me an extended warranty on a mouse!
Lazarus: It's nothing but gravy. And my advice to people is, don't bother. Because here's an interesting thing: Consumer Reports tells me that the median cost for the typical warranty almost matches dollar-for-dollar the median cost of the typical repair of that same product.
Vanek Smith: Well David, thanks as always for joining us. David Lazarus is the consumer columnist for the L.A. Times. Thanks so much, David.
Lazarus: Ho, ho, ho.