Americans are spending again, but more cautiously
TEXT OF STORY
Kai Ryssdal: It’s December 2010, of course, which makes it three years to the month since the Great Recession started. It has also been, as the Commerce Department reminded us this morning, three years since retail sales went in the tank. As of last month, they’re back. The Commerce Department said today November retail sales are basically where they were in the fall of 2007. Stores are loving that news as are economists. Consumer spending — as we’ve told you many, many times — is a huge engine for the American economy. But unemployment is still pretty high, personal income has been basically flat. The economy is, at best, a mixed bag. So why all the holiday cheer from consumers?
We sent Marketplace’s Stacey Vanek Smith to figure out what’s up.
Stacey Vanek Smith: It’s not necessarily optimism. Consumers feel pretty much the same about the state of the economy as they did last year. It’s just that they’re sick and tired of being frugal. And, says retail consultant Candace Corlett, shoppers have gotten used to their new economic situation.
Candace Corlett: They’ve had their personal equity and income rocked. But people are settling into a new reality. They’ve paid down their debt, they’ve postponed so many purchases, that they have to get back to buying some things.
But don’t expect a return of the shopaholics of yesteryear. Nancy Koehn is a retail expert at Harvard Business School. She says today’s consumer is a new animal and retailers need to recognize that.
Nancy Koehn: Retailers who are clapping their hands need to take a big, yoga breath and think about what this means. Because for 10 years, retailers thought about consumer behavior as “more is better” and “new is a must have” and that ethos is completely gone. The new normal is a very different set of behaviors and priorities and spending limitations.
At an outdoor holiday market near Grand Central Station in New York, shopper Tina McCourt says she’s being a lot more thoughtful about what she buys her kids and they’re getting fewer gifts.
Tina McCourt: They’re not getting 20 presents. They may get 10 more targeted presents, things that they specifically really want or need, rather than extraneous items that they maybe interested in.
Harvard’s Nancy Koehn says the new American shopper sets strict spending limits, spends a lot of time comparing prices; they also tend to make lists and check them twice.
In New York, I’m Stacey Vanek Smith for Marketplace.
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