The New Frugality: Come On, You Didn't Really Believe That, Did You?

Last Updated Apr 8, 2010 1:54 PM EDT

When the Great Recession first bit, and consumer spending fell off in ways and amounts it hadn't ever before, a number of commentators ventured that a new spending consciousness was afoot in America, returning to a simpler time, that sort of thing. I didn't fall for it at the time, as you can read at this post from the early days of MoneyWatch, and this week's reports on retail sales are my vindication.

The sales numbers are coming in very strong:

Johnson Redbook (an independent research firm, no links):

Our 31-company Johnson Redbook Same-store Sales Index (SSI) was up 9.0% following a 3.7% gain in February and a 3.0% gain in January...Among the retailers, 55% posted positive double-digit comps.
Redbook's grand total all-stores sales increase for the month was 11.4 percent.

From the International Council of Shopping Centers:

U.S. chain store sales for March 2010 rose precipitously posting a 9.0 percent comparable-store gain, the strongest reading since March 1999 (+9.3%)...
And a new source, at least new to me, Spending Pulse, provides exquisite detail:
The eCommerce channel was up 18.4% from last year, its 8th consecutive month of double digit growth, demonstrating that the channel continues to grow at a faster rate than traditional brick and mortar stores.

Luxury sales posted a 22.7% year-over-year increase. It is important to note that this is being measured against March 2009, a month in which we saw significant double digit declines in this sector.

U.S. Specialty Apparel Sales increased a solid 5.2% with strength across the board as every subsector posted positive year-over-year gains. Some of the strength in this category may be attributed to an earlier Easter this year, pushing much of the pre-Easter spending into March.

Overall electronics sales were up 4.9% year-over-year, posting a strong growth of 6.8% in the Appliance sub-sector and a gain of 4.5% year-over-year for Consumer Electronics sales. Tempering this, it is important to note that this sector is still down 4.2 % when compared to March of 2008.

Spending Pulse is a consulting division of MasterCard, and reports on all sorts of transactions and channels, not restricted to MasterCard, or even to credit cards.

And here are two vignettes from the Times of the wheels-of-commerce, going-from-strength-to-strength variety:

[A]fter months of cutting inventory to bring it in line with weakened demand, the nation's retailers are ordering more merchandise, [according to the National Retail Federation and the consulting firm Hackett Associates]. The cargo volume at major ports that handle retail imports is expected to increase 8 percent in April compared with the period a year ago.

...

Lauren Keshet, the owner of Paws and Claws, a pet care company in Hoboken, said her business suffered when the economy nose-dived and consumers snapped their wallets shut. "My business went to half" of what she had been selling, Ms. Keshet said. But today, "my business is booming again," she said. "It's really come back."

So has her spending, and that of other shoppers she has seen lately at the Westfield Garden State Plaza mall in Paramus, N.J. "Right now I'm renovating my house," she said. "I'm buying furniture."

Indeed, sales of furniture and furnishings combined increased 13.8 percent year-over-year in March, according to SpendingPulse.

So the people working in retail-related areas have more to spend.

I have probably been no indicator of anything spending-driven for 20 years, but even I was going to make over my New York bachelor pad this year. Instead I am spending lots of time, although little money, on a puppy that I adopted through Airedale Terrier Rescue, the metropolitan New York Chapter. Meet Rex, who will soon have his own blog:


Back to the cold hard facts of consumer spending. The astute retail analyst always has to take into account the weather, and the calendar -- in this case, whether Easter falls into March or April.

Some April sales have been borrowed from March, say the experts:

Looking ahead to April, ICSC Research anticipates that sales will be flat to down about 3% as the Easter"calendar"shift lift to March sales becomes a drag on reported sales in April.
So much for the collective wisdom of the stock market, which has traded up about three-quarters of a percentage point since the retail news came out. (Didn't they know there might be a "surprise" in these numbers?)

Maybe for some sorts of goods, such as electronics, we will still have to fight mano a mano to attain prior heights, but in total we are back to spending like champions: last November personal consumption expenditure hit a new all-time high (the black line in the graph below). Of course, personal saving (the green line), has suffered.


Click on the graph for a larger view
We're not borrowing as much to get there, however: total consumer credit peaked at $2,588 billion around the September 2008 Lehman failure, and has dropped to about $2,400 billion and not started growing again. That makes total consumer borrowing about the same as it was in summer 2007.

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