Consumer Spending and the Economy
http://thedianerehmshow.org/shows/2010-11-29/consumer-spending-and-economy
Black Friday and Cyber Monday Retail Sales: What they suggest about consumer confidence, prospects for job creation, and the overall US economy.
Guests
Mark Zandi
chief economist of Moody's Analytics and author of "Financial Shock" and the forthcoming book, "Paying the Price."
David Wessel
economics editor, The Wall Street Journal; author "In Fed We Trust"
Scott Krugman
Vice President, National Retail Federation.
Paco Underhill
founder and CEO of Envirosell, Inc. He is the author of 'Why We Buy' and 'Call of the Mall.'
Comments
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My suspicion is that the spending statistics (extrapolations from samples) are exaggerated. I was out there over the weekend, and my observation is that a record number of shoppers bought relatively little and that the deals were not all that good. Even more depressing is that most merchandise is imported from slave labor regions and that the goods are disposable and shoddy. TV is not improved by a bigger screen or clearer picture.
Mark Zandi: Do you have any comment on the results to the economy of the last gasps of irresponsible consumer credit use?
Pacho Underhill: Haven't the resorts to illusion been about exhausted? Aroma, the gateway to emotion, seems to have been overcome by penury. In the grocery I observe clumps of shoppers hovering over cheap cuts of meat: What does this mean?
Listeners, you can gauge the economy by the number of leftover cut Christmas trees. Watch for that in 3 weeks. Also observe how this material is disposed. Does it enter the municipal waste stream at taxpayers' expense?
Why do we concern ourselves with "consumer confidence"? Confidence is a feeling, and not something subject to easy measure.
We have very real, and very quantifiable statistics that could tell us all we need to know how much Americans can spend- consumer debt as a percentage of consumer incomes, average salaries as compared to cost of living, etc. How consumers *feel* about spending should not be nearly so relevant as how much spending they can *afford*.
The only thing consumer confidence might give us is a vague impression of how close to the edge Americans are willing to go in terms of how much of their income is saved for a rainy day vs being spent immediately, but that could be easily extrapolated from trends in the savings rate, which is also precisely calculated. So why do we put so much emphasis (or any at all) on a measure of feelings? Are the real numbers just that bad?
Wow, three people in the Carolinas like Diane Rehm. (Matthew, Grady and me)
I share the suspicion that consumer confidence (a statistic out of Ann Arbor, Michigan?) is merely promotional and propagandistic, rather than predictive of sales. I also question government statistics that I believe are over-optimistic about household finances. It is telling that most of the experts on this panel are in the business of optimistic boosterism. How can we expect to learn anything from this program besides how to shop irresponsibly. I agree with Grady that there's not much new or exciting this season. The X-box technology that follows body moves relates more to security than entertainment. Why can't people be allowed get exercise by performing useful tasks? It's like retail goods are enclosing our lives.
Another indicator (Grady)- the coming retail layoffs in January.
Also watch the increasing numbers of empty commercial stalls as loans cannot be met. (Give us another indicator Matthew, how 'bout it?)
National Hiring Day coming up in January. See which corporations put patriotism ahead of record profits and which don't. Stop buying from those who don't help out in these hard times.
Why should anyone buy from corporations that put excess profits ahead of patriotism. Time for this show to stop coddling corporations that according to the NYT had the biggest profits of all time in the 3rd quarter of this year. Corporations and panel pundits that think there won't be a backlash against corporate greed - are fooling themselves or trying to fool the public. They better start hiring, or we stop buying.
The bottom line is help out or go out of business.
The hand-held device and its subscription rate is a significant expense for most people. Consider how this expenditure lessens the ability to spend on tangible goods. Are people going around hungry or taking the Ramen noodle route in order to maintain social networking that may be a net cost rather than an asset?
QEII- It will not have an effect until it happens over the next 6 to 9 months. It amounts to gifting liquidity onto the financial class. It will not make us peons spend.
What your guests failed to take into account is that Corporations are making RECORD PROFITS! They are not forgoing current profits! They simply want Republicans in 2012 to make EVEN MORE!!
The guest made the suggestion that overall low wages were due to the amount of unskilled workers looking for jobs. I'd like to bring up the elevated requirements for most jobs that are not classic "low paying" jobs. In Cary, NC, it is impossible to get a job as a secretary or receptionist without a BA or higher. And these jobs only start at $25K. First off, why do you need a bachelor's degree to answer phones? Secondly, what college educated person with (most likely) around $25K in debt from getting their college education wants to use their degree to answer phones?
Most non-retail employers are setting their bars too high, to keep the lower class pushed down.
I thought it was interesting how much the guests focused so much on efficiency and price without paying tribute to the reasons why the goods are priced so low. It is a very important issue in that the environmental degradation and social problems that these cheap goods create along the production chain are not reflected in the final price of the goods.
We cannot continue to have such a short-term vision for our economic security. The box stores that we look to to drive our economy support very unsustainable use of finite natural resources and underpin the excessive waste that our consumerism produces. The actual social and environmental costs of these, along with the labor issues, will be borne by us in the future.
Non-retail employers aren't setting that bar up to "keep the lower class pushed down," they are doing it, quite simply, because a college degree is quite common now, and is a good predictor of discipline and success. If odds of success in the workplace are 80% for college grads, and 70% for non-grads, or even closer, even a gap of as little as 1%, given how abundant college grads are right now, why not get the college grads? This is especially true with high unemployment, since it means employers can afford to be choosy with so many highly qualified people out of work - businesses can hunt for good deals on labor just like shoppers can hunt for good deals on consumer goods due to demand currently being low.
That said, we've definately done a number on ourselves with our educational system. We're still running on this 1950's mentality that says that just having a college degree equals success, and we've been pumping our young people into a bloated University system under the impression that they'll just all come out and have $50,000 salaried jobs in middle management waiting for them.
We can't all be managers - lot of people just run the cash register - but we've been so successful in getting everyone the loans they need to "afford" college, that they come out the other side, with all the debt, only to find that the only job they can get is that same cash register job. The salary gap between college and HS grads may have once existed because college got you access to a small number of high paying jobs, but now it exists because college is a requirement to keep you competitive for the meanest low-level positions, and, without a degree, you can barely even land one of those.
As with so many other American trends, the word "unsustainable" is called to mind. We are well on our way to an education bubble that will be very rough on a number of our young people as it unwinds.
I think that "confidence" and normalcy have post-psychological sociological policy recommendation that are geographically "over the horizon" out of sight out of mind out of community and a nation out on a limb, by a tiny % who are not the "notisable " minority coalitions... but a pure NORMATIVE STATISTIC, that is taboo or geo/history sacreligious but very real. a minority within the majority [nat maj's...] a tiny % who are able to bring UP society but by geographic curse and indeed manifest destiny'$ SWEET CONSPIRACY.
Demoralizing the enemy [opec...china!] is easiest if the [opposing] population holds themselves down, a tiny % statistic of obscured but very fundamental SOCIAL JUSTICE of an exceptional [esteemed] nation/civil society.
Confidence isn't a coincidence, it's infact taboo to "discuss" geographically ISOLATED regions [ geo-culture ] we can't be... "isol-ated" we're not "ice-holes" we're fargoing... our-SELVES!{jinx-ED} -true social justice [VALUE!] is POWER-full [use "ANNYT", a social safety NET ] nation is love, geo IS RITE.
Yeah, a ship load of cheap [CHEAP!] shoes from overseas are a dubious "commodity" when we both loose the "Quality products" that we truly need.
And PLUS we don't have basic common knowledge on HOW TO MAKE or simply REPAIR "our own" stuff... [heavy leather sewing machine'$$... MAKE!!!] create. J.I.T. and of robotic perfection [fit]
Lining up things so WE are not wasting anything!!! including oppertunity and justice , we "feel" too inn-just to even see.
ORDER QUALITY MATERIAL may be the "carbon credit" that assures our moderation and well-being/"fair" of uncontaminated "Local Products", size 13 shoes-green....please??
I agree one hundred percent with the caller who said Republicans prefer a slow economy today so that President Obama is not re-elected. I disagree with your quest who said that he doesn't think that they would leave "profits on the table". I believe wealthy business owners have the time and money and the desire to stall progress during this presidents term for their own selfish gains. To suggest otherwise is to ignore the terrible decisions and illegal actions recently of some of this countries richest and most influential business leaders. Why your guest thinks that Republicans are suddenly going to come to the aid of our country because there is "profits on the table" is beyond me. After a long agonizing eight years of a president best described as a buffoon we now have a president who is an educated gentleman able to form and express intelligent ideas and it would be in the best interest of our countries future if Republicans could work with him.