Consumers Step Up Spending, Says Commerce Department
If retailers noticed an increase in consumer spending in December, the notion was confirmed on Feb. 1 by the U.S. Commerce Department.
American consumer spending increased by 0.7 percent in December, after increasing 0.5 percent in November, the department said. The American shopping spree may continue for the next few months, said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.
“People discount the strength in the economy,” Kyser said. “This is an economy that has a lot more life than people imagined.” The Commerce Department also said that Americans’ disposable income, or money left over after taxes, rose by 0.5 percent in December.
Many shopkeepers felt the Commerce Department’s statistics were reflected in their bottom line, yet the financial picture was not completely rosy, said Kathy Shawver, partner/ buyer at the Diane Merrick boutique in Los Angeles.
She said that December’s schizophrenic weather, where one day could be like summer and the next could be chilly, played havoc with the store’s cash flow. “When it was cold, people had no problem spending money,” Shawver said. “But it was so inconsistent. We’d have an 80-degree day and just make $2,000.”
Shawver said shopping has improved since the New Year. “I was prepared for a doom-andgloom January, but we’re pleased with our numbers, and people are buying smart. They’re buying basics that will last for a couple of years. We are not selling a lot of novelty.”
The Commerce Department also said that the savings rate worsened to minus 1.2 percent, from minus 1 percent the prior month. A negative rate suggests consumers are dipping into savings to maintain spending.
—Andrew Asch
