The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
So Goes the Consumer...
It seems American consumers have begun to feel the impact of the expiration of the payroll tax cut, fluctuating gasoline prices, delayed tax refunds, and increased health insurance premiums as evidenced by the U.S. Census Bureau’s advance retail sales estimates for March. The report showed a disappointing decline of 0.4 percent from the previous month, and the year-over-year increase for the first quarter of 2013 was 3.7 percent—the slowest quarterly increase since the national economic recovery began in 2009. Will the consumer bounce back, and why is it important to overall economic conditions?
Reports have indicated that consumers are beginning to pull back and readjust to the change in their paycheck. Many have opted to eliminate some of life’s “luxuries,” with the casual-dining sector taking a huge hit as increasing numbers of folks are staying home and cooking their own meals. Recent discussions with District contacts indicate that casual dining is limping along, having experienced the fourth consecutive year of decreased traffic. To combat this trend, some major restaurant chains are offering incentives to bring the customer back (including my personal favorite—the “buy one, take one” entrée deal!).
Not all segments of the retail industry have experienced the same decline as casual dining and are actually remaining somewhat upbeat. Some of our contacts have mentioned that salary-increase programs are being restored and this move, along with rising home values and equity prices, are having a positive impact.
Consumer spending accounts for nearly 70 percent of GDP. A stronger outlook for the economic growth requires stronger consumer spending, and for this to happen we need lower unemployment, higher wages, and an increase in credit.
Dr. Kleinhenz also discussed how recovering home values may lead to an increase in consumers’ ability to spend, noting that consumers’ willingness to spend is also key. While job security is rising—that is, workers’ belief that their job is safe—expectations regarding the economy and their own individual finances are still uncertain. Therefore, consumption increases depend on the improvement of consumers’ overall confidence.
By Christine Viets, a Regional Economics Information Network analyst in the Atlanta Fed’s Jacksonville Branch
TrackBack URL for this entry:
Listed below are links to blogs that reference So Goes the Consumer... :
The comments to this entry are closed.
- Southeastern Transportation: Tapping the Brakes?
- Southeast Manufacturing Slows in August
- It's Mostly Sunny in Florida
- Auto Manufacturing an Economic Boon for Tennessee
- Southeast Manufacturing Rebounded in June
- Southeast Manufacturing Dips in May
- Assessing the Impact of Oil Price Declines on Louisiana's Economy
- Seeking the Slack
- Middle Tennessee Consumer Confidence on the Rise
- Trials and Tribulations in Transportation
- November 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- Banks and banking
- Beige Book
- Business Cycles
- Commodity Prices
- Consumer Savings
- Data Releases
- Disaster recovery
- Economic conditions
- Economic Growth and Development
- Economic Indicators
- Fiscal Policy
- Gulf Coast
- Health Care
- Holiday Sales
- Labor Markets
- Local Economic Analysis and Research Network (LEARN)
- Monetary Policy
- Natural Disasters
- New Orleans
- Oil Spill
- Real Estate
- Sales Tax