Why isn’t the American consumer spending?

Consumer spending

Retail sales stalled during the month of July despite robust hiring levels.

Trying to get inside the head – or wallet – of the American consumer can be dizzying.

Data released by the Commerce Department Wednesday shows retail sales in July were virtually unchanged from the previous month and are at their weakest level since January.

One reason these numbers may be disappointing is actually because of strong car sales earlier in the year, says Chris Christopher, the director of consumer economics at IHS Global Insight.  

“You have a couple months of good auto sales, and then even after those months, the discretionary spending is a little bit lackluster,” he explains. “[Consumers] take it a little bit easier on other items that are not necessities.”

In a word, consumers are cautious. Coming out of the recession, they’ve learned to budget.

“For example, three-quarters of consumers make a shopping list before heading to the grocery store,” ­­says Susan Viamari, who covers consumer insights for IRI, a market-research company. “By and large, consumers are sticking to the lists that they’ve made.”

It’s not just that shoppers are being responsible. Buyers have become passionate about finding deals, says Candace Corlett, the president of WSL Strategic Retail. Moreover, wage growth has been fairly anemic and consumers have made paying down their debts a priority.

“It’s a very good thing for shoppers,” she says. “It’s less good for our economy, which thrives on consumers overspending.”

Shoppers aren't all about making savings and having no fun: Corlett says the American consumer can still be tempted by products that are particularly new and exciting—and that the number of people walking around with new Apple products or fitness trackers is proof of that.  

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