retail news in context, analysis with attitude

A couple of stories this morning suggest good news on the economic front...

• The Wall Street Journal reports that "a string of encouraging developments - improved household finances, a slowly improving job market and, perhaps most important, a rebounding housing market - are helping Americans rebuild their wealth and boosting consumer confidence to the highest levels since before the recession.

"These factors, along with subdued inflation and easing credit standards, could fuel a pickup in spending that sets in motion a 'virtuous circle,' where stronger spending begets jobs, and vice versa. Indeed, the resilience of consumer spending is a key reason the Federal Reserve expects the economy to grow between 3% and 3.5% next year, faster than the recent average of 2%."

Indeed, this is good news in an economic recovery that at times has seemed anemic: "Consumer spending has risen 9% since the end of the recession in mid-2009, after adjusting for inflation, half the average rate of increase in the seven previous recoveries since 1960. Following the recessions in 2001 and 1991, spending was up around 11%-12% by this point in the upturn."

• The Los Angeles Times reports that the Conference Board is out with its monthly Consumer Confidence Index, saying that it "unexpectedly jumped to 81.4 this month, up sharply from 74.3 in May. It was the third straight monthly increase, though the figures were compiled before the recent stock market sell-off ... The other leading gauge, from Thompson Reuters and the University of Michigan, hit a five-year high in May, but its preliminary reading for June dipped a bit."

"Expectations have also improved considerably over the past several months, suggesting that the pace of growth is unlikely to slow in the short term, and may even moderately pick up,” says Lynn Franco, the group's director of economic indicators.

And, the Times writes, "Reflecting the optimism, the percentage of consumers expecting the economy to produce more jobs in the next six months improved to 19.6% in June from 16.3% the previous month."


CNN reports on a new survey from saying that "roughly three-quarters of Americans are living paycheck-to-paycheck, with little to no emergency savings ... Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all."
KC's View:
So the good news is that things are getting better, albeit in a fragile economy. The bad news is that the long-term foundations may not be that strong, if people are not able to put any money away for the future. That's tough, especially when job security ain't what it used to be.