Consumer Confidence Crashes
Down trading, joblessness, poor import/export resolution add to the decline of consumer confidence. Plus, the Federal Reserve told us so.0
For the past couple months, retail has been riding the Armani coat tails of the market’s continued high. Reports of Forever 21’s 90,000 department store space in Times Square, Uniqlo’s successful expansion in Asia, Hermes taking over Paris and Sun Capital saving Limited had WWD addicts forgetting their was ever life below 10,000.
Until recently. Yesterday, retail stocks slide nearly 4% as consumer-confidence continued to wane. The Consumer Confidence Index soared up 60 on the 1-100 scale in mid-May, but yesterday reported scared shoppers about ten points lower. Stock prices reflected the mood that flipped shortly after a relatively strong Father’s Day. Concerns about jobs appear the main cause of retails untimely fall. People expecting better business conditions declined in numbers while people predicting poor business conditions for the near future rose. But why?
Last week the Federal Reserve downgraded the assessment of the economy, largely because of financial troubles in Europe. Personal consumption records were apparently not as high as originally posted for the 2nd quarter and With joblessness still top of mind for many Americans, this news reminded them that even in light of growing wallets, save, save, save. And as a result, companies are still trading down (reducing the number of features on products to match the consumer’s buying price), so current lines and lines for fall have less bells and whistles but are less expensive than their predecessors. So items consumers are buying might cost less.
My hypothesis: in summer, we wear less clothes. Less clothes cost less money. Retail goes down. I’m not sure this is at all right, but let’s just go for it until next week…in shopping.
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