Consumers say theyêre wary of spending, but sales are still high
Two recent studies show national consumer spending picking up for the holiday season but consumer morale still shaky as many remain reluctant to spend. Regionally, the effect of new leadership in Congress and a new governor in Maryland, who have both promised to cut spending, is unclear at this point. But consumers in a region still at least partly dependent on government contracts might also become reluctant to spend.
Nationally, McKinseyês latest Consumer Sentiment Survey showed that 40 percent of those surveyed are living paycheck to paycheck. Americans at all income levels have yet to return to their prerecession positive feelings about the countryês economy, McKinsey says.
Feelings about the economy vary by demographic. Hispanic households tend to be more frugal because of greater insecurity about personal finances, the report says. Millennials are more affected by paycheck cycles and are more involved in money-saving behavior. Baby boomers are somewhat less likely to cut back on spending. As has been reported previously in the Bulletin, boomers constitute a solid portion of the car market. And low-income consumers are continuing to struggle financially.
Cautious spending behavior is the new normal and is unlikely to change in the near future, McKinsey concludes.
Yet the Commerce Department said last week that November retail sales rose 0.7 percent from October and 5 percent from a year ago. As readers of the Bulletin are well aware, auto sales substantially outpaced other categories. Auto dealers saw the biggest gain of any group, at 1.7 percent. Overall spending for the month was higher than economists had expected.Download Bulletin PDF