How much are people in the mood to spend?

Adriene Hill Dec 23, 2011

Adriene Hill: We’ve got new consumer income and spending numbers today. Both eeked up 0.1 percent in November, which was less than some analysts expected. Especially after we’ve heard story upon story of shoppers snatching up Black Friday deals. We wanted to make some sense of it, so we called up Marshal Cohen, chief analyst with the NPD Group. Good morning, Marshal.

Marshal Cohen: Good morning.

Hill: I know some people were surprised by today’s small gain in spending, just 0.1 percent. How do you make sense of that when we heard about such strong holiday sales?

Cohen: We’ve got a little bit of a challenge in learning how to read the numbers because what’s happening is a lot of the positive numbers that we’re hearing about are actually perpetuated by the retailers themselves. In many cases, a lot of what we’re hearing about these increased numbers for shoppers spending is coming from foot traffic. And when you count foot traffic, that doesn’t necessarily mean you have more business. It just means you have more people who are shopping more often. Sometimes it’s more people themselves, sometimes it’s the same people shopping two and three times. That’s where a lot of this projected increase is coming from. The reality is the consumer is clearly telling us they’re spending a little bit more than last year, not a lot.

Hill: And what do these numbers overall tell us about the health of the economy?

Cohen: Basically what it does is it tells us the economy is willing to forge ahead and spend. So even though the economy is recovering on a slow pace, the consumer is willing to kind of drive that recovery a little bit faster. The consumer’s not rush and go out, and spending. They’re very thoughtful in their spending. It’s what I call calculated consumption. What that tells us is that without the consumer spending, there would be no recovery at this point. However, because the consumer is spending cautiously — but spending — we are in a slow recovery period.

Hill: Marshal Cohen is chief analyst with the NPD Group. Thanks so much.

Cohen: My pleasure.

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