By Quentin Fottrell
There may still be a recession at the cash register.
So far, consumer reports are providing few clues: Spending slowed last month, while retail sales were up, according to the Commerce Department. Meanwhile, consumer sentiment has held steady, according to the Thomson Reuters/University of Michigan’s index. Given these conflicting numbers, analysts say that despite the hoopla generated by Black Friday, consumers will show more restraint going into December.
Persistently high unemployment and a European debt crisis have spooked consumers. “I have a lukewarm prediction for the holiday season,” says Jeff Green, a retail analyst based in Phoenix, Ariz. Others are slightly more optimistic. “Based on the October data that showed an increase in both consumer spending and personal income, it’s fair to expect that this year’s holiday spending will be stronger than last year,” says Odysseas Papadimitriou, CEO of CardHub.com in Arlington, Va.
Retail sales growth this holiday season will be nearly 50% behind last year, others contend. “We’re still confident that it will be a solid holiday season, says Jack Kleinhenz, chief economist for the National Retail Federation, the industry group representing retailers. However, Kleinhenz says “solid” means retail sales up 2.8% this holiday season compared to last year; that’s down from 5.2% growth in 2010. “It’s still a very challenging environment,” he says. “Consumer sentiment is still at recessionary levels. There’s still a shortage of confidence about the economy.”