Consumer mood remains in recession
(CBS News) CHICAGO - We have just begun the fourth year of what has been a very bumpy recovery from the Great Recession. On Tuesday, we got some indications that better times may be near. For one thing, home prices were up more than 2 percent in May -- that's the third monthly increase. And Americans saw their incomes rise half a percent in June -- more than $500 per household on average.
Trouble is, Americans didn't spend any of it. In fact, they cut their spending by a tiny fraction -- one-tenth of a percent, or about $11 on average per household. That's the problem because consumer spending is 70 percent of our economy. We have a report on the fear of buying.
Nobody feels this lull more in spending deeply than the nation's small businessmen, one of whom told us Tuesday he is looking for some light at the end of this tunnel.
"July sales definitely are down about 10 to 15 percent," said Jeff Pape, who sells athletic gear online and from his 5,500-square-foot store in Elmhurst, Illinois.
"What we see is that people aren't spending as much as they used to," he said. "People that might have come into the store and spent $150 or $200 on stuff are now backing off to $60 or $70.
To Pape, there's no mystery why.
"People that had jobs that were making $100,000 or $150,000, are now making $40,000 or $50,000, and that has to affect their spending," he said.
That in turn affects Pape and his work force, now down to two from four. He acknowledged that he had to cut back on the things he purchases for his store. "We're working with our vendors to try and keep our costs as low as we can," he said.
You can see that ripple effect across the country. Shopping centers reported just a 1.8 percent growth in sales over the last year -- barely ahead of the inflation rate of 1.7 percent -- suggesting the consumer mood at least remains in recession.
"They're definitely hearing all the news and all the politicians about what's going on with the recession and the economy and spending," said Pape. "And I mean, the proof is in the pudding."
One bright spot is back-to-school spending, expected to be up 14 percent over last year. But the back-to-school season is traditionally the second-biggest spending season of the year after the winter holidays. So it's really not considered a good test of consumer intentions.
- Dean Reynolds
Dean Reynolds is a CBS News National Correspondent based in Chicago.
- Okla. tornado survivor finds dog buried alive under rubble
- Storm spotter: Oklahoma tornado "a nightmare"
- Survivors pulled from Okla. school hit by tornado
- Oklahoma tornado survivor: "Everything is gone"
- Injured third-grade teacher tells of trying to protect students
- Okla. family mourns child killed at school following tornado
- Tornado in Moore, Okla., was an EF5, the most powerful there is
- At least 51 dead after tornado strikes Oklahoma City suburb
- 5/20: Deadly tornado strikes Okla.; Fmr. Cincinnati IRS office worker speaks out
- Mother and daughter share stories of survival
- Oklahoma native's home destroyed for the second time
- 5/21: Plaza Towers Elementary School: A look at the damage; Tornado injuries: A doctor's point of view
- Saving the kids: One teacher's mission to keep her class safe
- 5/21: Family's last-minute decision likely saved their lives; Closer look reveals extent of destruction in Moore
- Agent: I was ordered to let U.S. guns into Mexico
- The next day: Search-and-rescue operations become search-and-recovery efforts