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Consumers get back in spending saddle

Stacey Vanek Smith Mar 3, 2010
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A shopper carries shopping bags on Fifth Avenue in New York City. Mario Tama/Getty Images

Consumers get back in spending saddle

Stacey Vanek Smith Mar 3, 2010
A shopper carries shopping bags on Fifth Avenue in New York City. Mario Tama/Getty Images
HTML EMBED:
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TEXT OF STORY

Kai Ryssdal: You know how we’ve been saying, for pretty much ever, that nothing sustainable is going to happen to get the economy back where it ought to be until consumers start spending again? And you know how month after month we report on retail sales figures that are, by and large, disappointing? Well, there may be change a’comin’.

A report out today from MasterCard found consumers have started buying again, without retailers having to resort to the extreme discounts that we’ve come to know and love. Marketplace’s Stacey Vanek-Smith has more.


STACEY VANEK-SMITH: Millions of people have lost their jobs and wages aren’t getting any better, but somehow, people are shopping again. Retail sales are expected to grow 2 percent in the first half of this year.

Frank Bedillo is an economist with Cantar Retail. He says that’s because some of the people who stopped shopping didn’t actually need to — and now that sympathy saving is easing up.

Frank Bedillo: The stock markets have bounced back and shoppers see that perhaps their wealth losses aren’t as severe as they were a year ago. Those people that cut back for the sake of precaution, they’re now feeling more comfortable to spend.

And they’re finding prices aren’t what they used to be. Retailers have backed away from the mega-markdowns they were using to lure shoppers last year.

Retail consultant Milton Pedraza says stores have gotten recession-savvy. They’re more strategic about mark-downs and more careful about what they stock.

Milton Pedraza: There’s sort of a recalibrating on the part of retailers to make sure that they do bring people in. I think the other piece is they’re keeping inventories limited, so that they have to discount less, and people have to pay full price.

But there are still some big barriers to real retail sales growth, says Conference Board economist Lynn Franco. She points out that even now, sales are less than half of what they are in a robust economy.

Lynn Franco: The flow of cash and credit is not what it used to be. So while their desire to shop may return, their ability is going to continue to be hampered.

Franco says a real recovery will probably take a couple of years.

I’m Stacey Vanek-Smith for Marketplace.

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