The back-to-school sales period should be completed within two weeks. New data show that the season failed to produce better results than last year and may even have been worse. “Americans’ self-reported spending in stores, restaurants, gas stations, and online averaged $61 per day during the week ending Aug. 29. So far, August and back-to-school 2010 spending trends appear no better than those of August 2009,” according to Gallup. The number is down from $66 in July.
The research firm makes the pessimistic observation that the “new normal” of spending may have dropped to range of $59 to $67 a month, which is hardly enough to jumpstart or maintain a recovery.
The research obviously adds to the data that show that the economy is not picking up and that there may be another retail sales disaster this holiday similar to the only that occurred two years ago. That 2008 holiday period was weak enough to cause thousands of store closings and tens of thousands of layoffs in the sector. That, in turn, helped put the economy deeper into recession in early 2009.
It is often observed that consumer spending is 65% of GDP. The Administration has hoped to replace some of that with income from exports. That can only be a reality of other parts of the world post substantial economic growth, and outside China and India that is not happening. Those two nations cannot carry the full load of the need of Western economies to raise their export activity.
It will be a long, hard winter for retailers and the national economy has no ready way to make up for that.
Douglas A. McIntyre