Retail numbers mixed, affluent shoppers pull back

posted at 9:37 pm on July 8, 2010 by Ed Morrissey

Retail sales in June held more bad news for Recovery Summer.  The Associated Press called the numbers “tepid” in its first report on the RetailMetrics analysis of reporting figures from major retailers.  Sales were “sluggish” for everyone — and the people with more money than most began keeping their hands in their pockets.

First, the overall look at retail activity last month:

Americans didn’t go on many shopping sprees in June, resulting in sluggish sales for many retailers. It often took deeply discounted clothing to get shoppers to spend — and then only if they needed it.

The lackluster performance, being compared with a weak June 2009, is raising concerns about the back-to-school shopping season and the health of the economic recovery.

After ramping up spending surprisingly in the first quarter, shoppers have hunkered down since April. Some worry they’ll continue to be tight-fisted through the holiday shopping season.

June usually brings out the discounts, especially in clothing stores, as retailers prepare for fall and winter and the upcoming school season, so discounts are nothing new.  To move inventory this June, though, retailers had to cut prices very low and lost ground as a result:

June is a time when stores clear out summer goods to make room for back-to-school merchandise. But analysts say discounting was heavier than expected as stores had to work hard to pull in shoppers continuing to grapple with a deluge of financial issues. Such deeper-than-planned discounting resulted some stores, including American Eagle Outfitters and Wet Seal, trimming profit forecasts Thursday.

Clothing stores accelerated discounting toward the end of June after not getting enough business, BMO Capital Markets analyst John Morris said. He estimated that volume and level of discounts at the mall-based apparel chains he tracks was even with a year ago even as stores carry less inventory than a year ago. Discounting was down 5 percent in May from a year earlier, after being down 10 percent from February through April, Morris said.

In a surprising turn, even those with plenty of cash have started cutting back on spending.  The later AP analysis, published at CBS, shows that luxury spending dropped sharply in June just as the summer season got underway:

Affluent Americans went back to tightening their belts in June after months of showing other shoppers how to spend, raising concerns for the overall economy.

Data released late Wednesday by MasterCard Advisors’ SpendingPulse shows luxury spending dropped in June for the first time since November. …

The 3.9 percent decline in luxury spending from a year earlier is particularly worrisome because the well-heeled – households with annual incomes in the top 20 percent, about $158,000 on average – account for almost 40 percent of overall consumer spending.

And a downtrend in luxury spending, which excludes jewelry but includes upscale clothing, accessories and restaurants, could signal trouble for retail and in turn for the broader economy. Consumer spending – including such major expenses as health care – makes up about 70 percent of U.S. economic activity.

With Recovery Summer quickly turning into the WIN buttons of 2010, the Obama administration has become desperate to incentivize consumer spending.  How desperate?  They have the biggest retailer in the country arranging SBA loans to get consumers to open their wallets:

Tired of waiting for spending to rebound on its own, retailers are taking matters into their own hands. Stores like Sam’s Club, Target, Toys “R” Us, Staples and Office Depot are offering unconventional promotions meant not only to attract visitors to stores, but also to get them feeling profligate.

Sam’s Club is introducing a program in which it facilitates loans for shoppers of up to $25,000, backed by the Small Business Administration. Target will give its credit card holders 5 percent discounts. Toys “R” Us is instituting a holiday fund program where it adds to shoppers’ savings, and Staples and Office Depot are giving away office products for a penny or at no cost. …

Of the over-the-counter stimulus plans, the one at Sam’s Club is the most unusual.

Sam’s began testing the program in May and will soon start marketing S.B.A. loans of $5,000 to $25,000 for its members nationwide. Superior Financial Group, which is managing the loans, gives Sam’s members a $100 discount on the application fee, and lower interest rates, because of how much business it expects through the arrangement.

The company says it does not expect the program to be a big moneymaker, though it earns $50 for each financed loan. The point is to get customers spending more freely — and, it hopes, spending at Sam’s Club.

Sam’s Club is a subsidiary of Wal-Mart.  Yes, that Wal-Mart, the bête noir of the Left, the eeeeeeeevil capitalist juggernaut that Democrats routinely attack in order to build populist points.  The Obama White House must feel quite a bit of desperation to partner up with Wal-Mart, and this program sounds pretty doggone desperate.  Is it really so hard to give out SBA loans that the government needs to discount them through Sam’s Club?  And do you have to get 12 loans at a time and carry them out in the flatbed cart?

Update: King Banaian is more optimistic after reviewing the raw data.


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Obama’s message – Max out those credit cards folks…since I just maxed out the US credit card, what more damage can be done. You’re children will now die alone in a frozen, desolate concrete apartment block…but it’s all good. My kids will be fine and thank you for asking.

FORE!

AUINSC on July 8, 2010 at 9:41 PM

Looks like WalMart has too much cash on hand and needs to put it to work somewhere.

Skandia Recluse on July 8, 2010 at 9:42 PM

the really interesting and disheartening data today in re consumers was consumer credit dropped 6 billion- it is in freefall.consumers are defaulting left and right, credit lines are still being pulled and only the high end did well in retail

The Federal Reserve reports:

Consumer credit decreased at an annual rate of 4-1/2 percent in May 2010. Revolving credit decreased at an annual rate of 10-1/2 percent, and nonrevolving credit decreased at an annual rate of 1-1/2 percent.

GDP is heading for another fall

everyone is moving their gains into 2010 to avoid the imminent tax onslaught and in ’11 we are gonna see the double dip writ large

ginaswo on July 8, 2010 at 9:43 PM

Damn Ed. You are working your butt off this week. How many posts have you made since Allah’s vacation started?

taney71 on July 8, 2010 at 9:43 PM

“…and the people with more money than most began keeping their hands in their pockets.”

Hey if this is just making the news now, then it’s *really* bad.

I had my own marketing firm working with companies that cater specifically to the ‘affluent homeowner’, and ‘affluent’ people started keeping their hands in the pockets two years ago. I’ve since moved on, and a bunch of the companies I worked with that had been around for 20 years, very successful, employing lots of folks, are now *gone*.

If that’s getting *worse* now – enough that the press is actually mentioning it specifically – damn.

Midas on July 8, 2010 at 9:45 PM

I know this is OT, Ed, and I apologize, but my mom just called and asked if I had heard about O’Bozo’s speach today at one of the fundraisers. Apparently he sounded as if he’d had one too many. Does anyone know what I’m talking about and/or know where I can find the video?

txag92 on July 8, 2010 at 9:47 PM

everyone is moving their gains into 2010 to avoid the imminent tax onslaught and in ‘11 we are gonna see the double dip writ large

ginaswo on July 8, 2010 at 9:43 PM

Yep, if something isn’t done to stop the tax cuts from expiring, things are going to *really* fall off a cliff early next year.

Midas on July 8, 2010 at 9:47 PM

Damn straight, we are not spending! “Nudges” work both ways. The way this administration is wasting money, they can do without our sales tax. STOP SPENDING and let them twist in the breeze!

indypat on July 8, 2010 at 9:47 PM

But Obama says the economy is on the right track! This is Recovery Summer!

Can anyone tell me if Obama even graduated from high school? I think his bachelor’s and law degrees are fake.

MeAlice on July 8, 2010 at 9:48 PM

For the “progressives”, an economic downturn is a small price to pay for wealth redistribution/reparations.

The dirty work of social engineering is going on underneath radar, while the chattering classes are distracted with ish like economic statistics.

rickyricardo on July 8, 2010 at 9:49 PM

Plunkett’s Retail Industry
Market research, business trends & statistics analysis, & business development support
======================================
http://www.plunkettresearch.com/Industries/Retailing/tabid/210/Default.aspx#IndustryStatistics

canopfor on July 8, 2010 at 9:51 PM

Sam’s Club is introducing a program in which it facilitates loans for shoppers of up to $25,000, backed by the Small Business Administration

You can’t borrow your way out of debt. Consumers have to much debt as it is. If this even moderately works it will be like the Cash for Clunkers and Cash for Homes fiasco. It will front load spending this summer and then the doldrums for a long time to come.

chemman on July 8, 2010 at 9:54 PM

The following trends are provided in our research products:

1. Introduction to the Retail Industry > (View Sample Data)
2. Wal-Mart Dominates as the World’s Biggest Retailer (and now America’s Biggest Grocer)
3. Department Stores have Evolved into Giant Apparel, Cosmetics and Accessories Stores
4. Discounting and Discount Stores Evolve
5. Private Label Brands Boom

I was unemployed for 9 months. I just got a job at a private label manufacturer. Sales are booming are putting up new job postings weekly.

Inanemergencydial on July 8, 2010 at 9:54 PM

After the 9/11 terrorist attacks, President Bush didn’t call for sacrifice. He called for shopping. “Get down to Disney World in Florida,” he said. “Take your families and enjoy life, the way we want it to be enjoyed.”

(Time Magazine)

Remember this? And how the MSM sneered at the idea that one could support the country by shopping? If the One suggests the same thing will they…yeah, right.

Wethal on July 8, 2010 at 9:55 PM

ginaswo on July 8, 2010 at 9:43 PM

This is math geek stuff but we appear to be looking at a double dip that generally follows a cotangent curve. The next drop is going to hurt just as bad as the first one..

chemman on July 8, 2010 at 9:59 PM

With Recovery Summer quickly turning into the WIN buttons of 2010

For the youngsters out there, that’s Whip Inflation Now. From the 70s.

itsnotaboutme on July 8, 2010 at 10:00 PM

O/T
==============

On Fox,crowds gather on streets for
the Oakland Court decision!!!!!!!!!!!!!!!!!
============================

canopfor on July 8, 2010 at 10:01 PM

“In a surprising turn, even those with plenty of cash have started cutting back on spending.”

Unexpectedly…!

Seven Percent Solution on July 8, 2010 at 10:02 PM

Seven Percent Solution on July 8, 2010 at 10:02 PM

To everyone but us. They will need all their money just to get by on once all the libtards taxes kick in. When it is all said and done they will end up with less disposable income than the working poor.

chemman on July 8, 2010 at 10:05 PM

I’m waiting for the ads to appear…….not the ‘got milk?’ ads, the ‘Got a Gun? You’ll need it!” ad.

GarandFan on July 8, 2010 at 10:06 PM

I need clothes, but I’m not spending. Why not?

ladyingray on July 8, 2010 at 10:09 PM

canopfor on July 8, 2010 at 10:01 PM

I picture your place with 4 computer monitors and 12 plasma TVs all tuned to different channels. Kinda like a sports bar.
It’s the only explanation for all your quick knowledge in such little time. :)

Electrongod on July 8, 2010 at 10:10 PM

canopfor’s “situation room.”

Inanemergencydial on July 8, 2010 at 10:14 PM

On Fox,crowds gather on streets for
the Oakland Court decision!!!!!!!!!!!!!!!!!
============================

canopfor on July 8, 2010 at 10:01 PM

Its gonna get real ugly there.
As soon as the sun goes down. All the essential elements are there on the streets now :
nation of islam, Ella Baker’s people, copwatch, all the black ‘community orgs’, church ‘leaders’ and police in riot gear.
Oaks just wanna have fun

macncheez on July 8, 2010 at 10:15 PM

The Obama White House must feel quite a bit of desperation to partner up with Wal-Mart, and this program sounds pretty doggone desperate.

Desperation? … no.

Adoption…secondment…

percysunshine on July 8, 2010 at 10:15 PM

OT: Glad to see Governor Strickland of Ohio was as successful with his song and dance in wooing LeBron to stay in Cleveland as he has been in helping to create a state economy that facilitates retention, let alone increases, in jobs.

churchill995 on July 8, 2010 at 10:20 PM

I know this is OT, Ed, and I apologize, but my mom just called and asked if I had heard about O’Bozo’s speach today at one of the fundraisers. Apparently he sounded as if he’d had one too many. Does anyone know what I’m talking about and/or know where I can find the video?

txag92 on July 8, 2010 at 9:47 PM

txag92: Is this it!!:)
=======================================================
President Obama in Kansas City – on the economy – Smith Electric Vehicles – July 8, 2010

Audio and Transcript!

http://www.theygaveusarepublic.com/

canopfor on July 8, 2010 at 10:22 PM

That $900 leather Barcalounger is pretty nice, but will it fit inside my tarp-covered refrigerator box, down by the river? Sometimes you’d like to buy, but there’s just no room. :)

RBMN on July 8, 2010 at 10:24 PM

canopfor on July 8, 2010 at 10:01 PM
==================
Its gonna get real ugly there.
As soon as the sun goes down. All the essential elements are there on the streets now :
nation of islam, Ella Baker’s people, copwatch, all the black ‘community orgs’, church ‘leaders’ and police in riot gear.
Oaks just wanna have fun

macncheez on July 8, 2010 at 10:15 PM

macncheez: And,add Community Organizer in Chief,plus the
Black Panthers can`t be prosecuted,and your
right,a deadly mix!!!:)

canopfor on July 8, 2010 at 10:29 PM

President Obama in Kansas City – on the economy – Smith Electric Vehicles – July 8, 2010

Audio and Transcript!

http://www.theygaveusarepublic.com/

canopfor on July 8, 2010 at 10:22 PM

Just glanced over Obama’s speech. Lots of talk about electric vehicles running off of batteries but no mention on how these batteries get their charge, other then one mention of wind. So how do we transport electricity from one place to another? Right now we can’t even have a reliable grid to keep large cities from having brown-outs during the summer days. Where, I mean, how do we get all this power to the end user?

Electrongod on July 8, 2010 at 10:30 PM

Where, I mean, how do we get all this power to the end user?

Electrongod on July 8, 2010 at 10:30 PM

From unicorn smiles, of course.

Laura in Maryland on July 8, 2010 at 10:31 PM

I’ve been shopping quite a bit. But I am couponing. I purchase items on sale and use coupons. I’m averaging 75% discount overall on non-food (tracking it on a spreadsheet). For food: Farmer’s market and bulk meat purchases from locally-owned butcher shop to stock the freezer.
For apparel, it’s the second hand store. The mall is anathema. Thrifty is in.

kooly on July 8, 2010 at 10:33 PM

canopfor’s “situation room.”

Inanemergencydial on July 8, 2010 at 10:14 PM

Inanemergencydial: Oh gawd,thanks for that.I laugh my *ss
off,every time,hehe,war room,breach of
security!!:)

canopfor on July 8, 2010 at 10:33 PM

Electrongod on July 8, 2010 at 10:30 PM

Good questions. Also, a greenie recently brought up a good point on a PBS show. Rare earth is no longer mined in the US; China now has the corner on the market. Oooops.

Laura in Maryland on July 8, 2010 at 10:36 PM

When it is all said and done they will end up with less disposable income than the working poor.

chemman on July 8, 2010 at 10:05 PM

It’s starting to dawn on them…

… “We fuc%ed up!”

Seven Percent Solution on July 8, 2010 at 10:39 PM

canopfor on July 8, 2010 at 10:01 PM
=============================================
I picture your place with 4 computer monitors and 12 plasma TVs all tuned to different channels. Kinda like a sports bar.
It’s the only explanation for all your quick knowledge in such little time. :)

Electrongod on July 8, 2010 at 10:10 PM

Electrongod: Oh I wish,the secret is two google windows open
as well as a Breitbart window,and two You-Tube
windows to access possible videos,hehe!!:)

Oh,and the exact search phrase,really helps!!

canopfor on July 8, 2010 at 10:40 PM

Perhaps Sams and Wal Mart are on to something. They are feeling the pulse of America, and in a strange way perhaps they are going to find a way to “give back to America” by allowing their members (making it easier) to purchase quantities of essential items in bulk.

Things such as TP, water, soap, canned goods, dry goods.

Key West Reader on July 8, 2010 at 10:41 PM

canopfor on July 8, 2010 at 9:58 PM
==================================
Al least someone is getting some use from that 18 million dollar website :)

Electrongod on July 8, 2010 at 10:05 PM

Electrongod:Ya,job creation,ahem!!

canopfor on July 8, 2010 at 10:42 PM

Electrongod:Ya,job creation,ahem!!

canopfor on July 8, 2010 at 10:42 PM

Good one.

Electrongod on July 8, 2010 at 10:44 PM

“We fuc%ed up!”
Seven Percent Solution on July 8, 2010 at 10:39 PM

No no! I’m liking this Obama fella more and more. I want some of that wealth redistribution; let’s start with San Fran Nan’s winery inventory and some of Buffet’s cash.

Laura in Maryland on July 8, 2010 at 10:58 PM

Hmmmmm.

“Obama’s message – Max out those credit cards folks…since I just maxed out the US credit card, what more damage can be done. You’re children will now die alone in a frozen, desolate concrete apartment block…but it’s all good. My kids will be fine and thank you for asking.”

“Oh look arugula!” – B. Obama, shopper, Whole Foods.

memomachine on July 8, 2010 at 11:12 PM

Yeah, let’s encourage more consumer debt — that’s a great idea.

Is it really any wonder affluent people are not spending? They didn’t become affluent from being stupid. They know what’s coming next year and they’re preparing for it now. As someone upthread mentioned, if something isn’t done to stop the tax cuts from expiring, we’re all in for a world of hurt.

NoLeftTurn on July 8, 2010 at 11:25 PM

Yes, they’re waiting till Nov 2010 to start spending. Then they’ll know that adult supervision has come back to town.

Mojave Mark on July 8, 2010 at 11:47 PM

Can anyone tell me if Obama even graduated from high school? I think his bachelor’s and law degrees are fake.

Given his school records at Columbia were sealed by him, yeah, probably so.

TulsAmerican on July 9, 2010 at 12:24 AM

Yet, the child babbles.

Schadenfreude on July 9, 2010 at 12:35 AM

Take it easy man. You are having a hard time with Allah Off. Make sure he pays in kind :-)

Everybody I know is holding back. Even people who are well off (emergency fund intact, no debt families). They are so freaked out about job insecurity. When you have the POTUS doing everything he can to destroy confidence and business, the best route is to double down on savings. Those savigs might also be worthless if this is not stopped.

antisocial on July 9, 2010 at 12:37 AM

But Obama says the economy is on the right track! This is Recovery Summer!

Can anyone tell me if Obama even graduated from high school? I think his bachelor’s and law degrees are fake.

MeAlice on July 8, 2010 at 9:48 PM

Nope, they’re genuine……he found them in a box of Cracker Jacks.

Fighton03 on July 9, 2010 at 1:17 AM

households with annual incomes in the top 20 percent, about $158,000 on average – account for almost 40 percent of overall consumer spending.

$158K is not in the top 20 percent of income. Not even close. It’s more like $100K.

angryed on July 9, 2010 at 6:11 AM

Where, I mean, how do we get all this power to the end user?

Electrongod on July 8, 2010 at 10:30 PM

Now don’t be silly, E-g. Barry Obama, like all brilliant liberals, knows exactly where electricity comes from: the wall. And there’s an unlimited supply of it!

It’s sort of like money that way. That’s how brilliant liberals justify spending trillions of dollars we don’t have. Don’t think about where the money comes from or how we’ll ever be able to pay it back, just spend, spend, spend! As that famous economic genius Joe Biden informed us, the only way for the nation to avoid bankruptcy is to keep spending money we don’t have.

So by all means, buy that electric car and plug that battery into the wall. Don’t worry about what it’ll do to your electric bill, or what effect it’ll have on the national grid when millions of other drivers also plug in. The magic wall, just like Barry’s magic “stash,” will always produce — and it’s all “free!”

AZCoyote on July 9, 2010 at 7:33 AM

Is it really so hard to give out SBA loans that the government needs to discount them through Sam’s Club?”

Yes. Banks currently rate just behind lawyers and government for red tape and BS and things have gotten much worse since the “financial crisis.” Instead of just pulling their heads out of their rear ends and stopping their giving of houses to people who couldn’t pay for them, they decided to tighten all lending requirements etc. and make it near impossible to get funding. It really is that bad.

Free Indeed on July 9, 2010 at 8:11 AM

Huh, so this is what a 3rd world counrty feels like.

abobo on July 9, 2010 at 9:28 AM

Huh, how can this be? Rush spent a gazillion dollars on the wedding in June which could have stimulated several 3rd world countries. I’m sure the sales tax revenue in Florida got a big bump. Maybe Crist can find the dough to prevent the oil from reaching the shores

Kissmygrits on July 9, 2010 at 9:48 AM