Consumers Spend Less for Second Month in a Row

With unemployment rapidly rising, no wonder consumers are afraid to spend. From CNN Money:

Retailers logged a second straight month of sales declines in April as consumers continued to pull back on all types of unessential purchases, the government reported Wednesday. The Commerce Department said total retail sales fell 0.4% last month, compared with March’s revised decline of 1.3%. Retailers logged a second straight month of sales declines in April as consumers continued to pull back on all types of unessential purchases, the government reported Wednesday.


43 Responses to “Consumers Spend Less for Second Month in a Row”

  1. 1 Leonardo Sanchez Econ 101 May 13, 2009 at 1:14 PM

    Yes but it need to be more specific the retailers loosing money are mostly in the clothing, electronic games, furniture, cars store dealers. Yes these are a few of the stores going downhill which i dont like because i wish the best to everyone but other stores like Food, Gym, Electronic cell phone store are pretty stabel .. Nobody can survive this economy without food!

    Eveyone has to eat. And i See eveyone not one person less when i go to the gym. & of course no one can survive without ther phone. Im not being funny when i say this because it used to be a luxury but now it is a need!

    Cell phones are needed to make business calls to make money or to get a call from your employer to work an extra late shift which in turn makes you money.

    Yes cell phones are good for texting but there are to control and maintain balance in out employed lifes! Which is why not all reatailers like T-Mobile / Metro pcs / And other companies are making there plans better to fit into this economy.

  2. 2 Hyo Kim May 13, 2009 at 1:19 PM

    We can relate this to taxation, which government has kept rasing for past few months. Higher tax might disencourage consumer spending, especially at this time.

  3. 3 Courtney Gotfried May 13, 2009 at 1:42 PM

    I think people are spending money more right now. When I’ve been at the mall, it has been much busier than before. Prior to now, the mall has been quite empty and no one has been buying anything. I think that we need to look at the difference between now around 3-4 months ago.
    I think that the stores are busier now and sales will start to gradually increase. I think that people need to just get out there and spend their money because that is the way to stimulate the economy.

  4. 4 Molly Jordan May 14, 2009 at 1:33 PM

    I agree that higher taxes will discourage spending. The truth is that no one knows how long we will be in a recession; sure theree are forecasts and monthly reports, but announcing percentage point changes will not bring back consumer confidence. People are sitting on their money right now and that’s how it is going to be until the economy turns around.

  5. 5 Jim Castilone May 14, 2009 at 2:06 PM

    I think that it’s good that people are spending less. People have been living outside of their means for so long, I’m glad to see that they’re starting to realize what they can cut back on. I don’t know about any where else, but the sales tax was recently raised in Sacramento and I can definitely see that as a deterrent to people to go out and spend. I agree with Molly that when people start feeling like the economy is turning around, they’ll feel more confident about spending.

  6. 6 Casey Kingdon May 14, 2009 at 3:34 PM

    People in this poor economy today are obviously afraid of this increasing unemployment rate. With the unemployment rate as high as it is today, people are simply more worried about saving their money for the long-term instead of spending it on luxury goods, therefore decreasing consumer spending.

  7. 7 Kevin Clark St marys Macro mwf May 14, 2009 at 6:15 PM

    This should be expected during a “recession” as luxury goods are not going to be purchased as frequently as everyones disposable incomes are diminishing. However a sales drop of 1.4% one month and .4% the next month is hardly something to panic over. Like i said before all consumers are cutting back their spending during this economic hardship that our country is facing, however this is not a permanent condition. The market, along with everyones spending habits work in cycles, it just so happens that right now we are in a downturn with consumer spending heading for a trough, but the good news from all of this is theres only one direction to go from here. UP!

  8. 8 tmt2 May 14, 2009 at 10:28 PM

    I think its understandable to be feeling very cautious about where their money is being spent. They are unaware of whether or not their jobs will be secure or not so they are playing it safe until their companies stop laying people off. Its hard to start spending and helping the economy when you are unaware of your own future but eventually it needs to happen.

  9. 9 jenna s May 15, 2009 at 12:29 AM

    I do feel that the increase in sales tax has discouraged many from spending as they usually do. Furthermore, the economy is still slow. The unemployment rate has gone up so that means that people are still losing their jobs. On the other hand, I have seen so many people out shopping. The malls are packed, I have to make reservations to get into restaurants, and the lines at the movie theaters wrap around the building. These are indications that people are starting to open their wallets. Perhaps the worst of the job cuts are over, and people now have the green light to spend again.

  10. 10 Michelle V May 15, 2009 at 6:39 AM

    I feel that we have seen the worst in all of the job loss and that we are moving into spending more money again. When you go to a store you begin to see more and more people shopping and spending their money. This is not just on the essentials such as food but also on non-essential items. Driving out on the road I am seeing more and more new cars and I feel that the number of houses for sale has also decreased. Not only this, but I feel that people are beginning to spend more at malls and restaurants are getting more and more customers.

  11. 11 tlr7 May 15, 2009 at 11:27 AM

    employment is a big factor in spending, if people dont have an income, its tough to purchase goods and services. While people are still afraid of losing their jobs, or have already lost their job, consumers are going to keep their money tight in fear of the future not looking as good as everyone is hoping and expecting it to be.

  12. 12 Jerry Ellison May 15, 2009 at 10:54 PM

    Im not surprised that this seems to be a recurring trend and in a way i think its kind of good. people are starting to realize that times are not so good and their starting to adjust the way they treat money. i feel like America has become increasingly materialistic and wasteful as the years go on. Now their learning what its like when things are all going so well. My family has definately felt the heat of the recession.

  13. 13 annmarie minite May 16, 2009 at 3:39 PM

    I think higer taxes result in people being more money conscience. It is a fact that people are not spending as much money on luxury goods like they did in the past. People are having trouble making ends meet due to loss jobs and pay cuts. The media doesn’t help the situation either. I dont believe people are going to start spending money like they use to until they see a drastic change in the economy.

  14. 14 Robert LaVoy May 16, 2009 at 4:31 PM

    The fact that consumer spending is on the decline is not surprising. With the rising unemployment rate and threats of job loss, consumers are much more careful with their finances than if America was not in a recession. It will be interesting to see how the market reacts to this decrease in consumption. Possibly, things will begin to turn around and follow the trend of growth that has recently been going on in the stock market. I think moral i. key in situations like these and people just need to be told things will be ok in order for them to start consuming more again,

  15. 15 SMCecon May 16, 2009 at 4:37 PM

    Decreasing taxes may be useful but what would need to happen in conjuction for it to be totally effective is a decrease in government spending. It is ironic how we haven’t heard much press about government spending although we have heard about taxes and a decrease in consumer spending. What is the government doing with our money nowardays…oh yeah, bailing out the domestic car industry!

  16. 16 Linda Villasenor May 16, 2009 at 5:29 PM

    It’s natural for people to act this way because they are afraid to go through worst living conditions, such as not being able to afford the rent, or be able to pay the utility bills. Rent and the utility bills are people’s priority and they need to make sure that they have enough money for the future months because they are not going to know if the economy is going to worsen or not. I definitely don’t buy unneccasry things because I rather have some money saved up just in case things get worse.

  17. 17 Hannibal May 16, 2009 at 9:14 PM

    What doesn’t make sense about this is the following:

    Health care costs have dropped, interest rates are going down, the unemployment rate is supposedly going down…

    so why are people still not spending money? Well I think the most valid reason is because people are still unemployed and even if they aren’t, everyone is trying to hang on to whatever money they have to pay bills and other expenses.

    I’m soooo tired of hearing about unemployment, I feel like it’s mentioned everyday in one way or another, if it’s not in the news it’s a part of the conversation. I just wonder how long this is going to be like this.

  18. 18 nancy moussa May 17, 2009 at 8:11 AM

    No one is spending money right now since we are in a recession. Lot’s of people don’t have the money to go out and purchase many goods that aren’t necessary. I think that spending will eventually increase, but first employment will have to go up.

  19. 19 Cole Scharton May 17, 2009 at 9:27 AM

    This is a scary statistic. I assume that this is a peak season for most clothing retailers with summer designs and whatnot. If purchasing continues to decline, more people will be out of work. I would have assumed that retail would not fall as much as other areas, because people who still have money are still going to buy new clothes etc. I am also not sure of the relevancy of 0.4%. This seems like a small amount considering the income for california citizens is declining by an estimated 1% this year.

  20. 20 Walter Munill May 17, 2009 at 1:23 PM

    While consumer spending did decrease for the second straight moth the percentage is a fraction of one percent after being above a percent the previous moth so I think that it may be a sign of the economy turning around. It’s like the old saying goes it is alway the worst before it gets better so although the spending is still decreasing it is now decreasing at a decreasing rate which theoretically isn’t as bad

  21. 21 mike furlong May 17, 2009 at 3:57 PM

    This outcome of a decrease in sales with clothing, furniture and electronic items isn’t surprising. Most people who’s finical situation isn’t well, will not purchase new products where the demand for them is decreasing. This decrease makes sense except for gas since it’s a product with a relatively inelastic demand. The increase in items which are more ‘wants’ and retail items wont rise until there is more of a sign of economic improvement in jobs and in the market.

  22. 22 Nikolas Bunton May 17, 2009 at 6:21 PM

    This decrease in spending is due to consumer expectations, and with the economy in shambles its no wonder consumer spending is down. All we hear on the news is negativity about the state of America’s economy, which in turn scares consumers into spending less. Again, talk about our dwindling economy becomes a self-fulfilling prophecy.

  23. 23 Simon Kudus May 17, 2009 at 7:24 PM

    This is just a sign of our time. Of course we need people to spend to stimulate the economy and get us out of this recession that hit us in 2007. The majority of the people can’t afford to spend more most Americans are living pay-check to pay-check. Now, is the time for people with disposable income to spend. But most likely not going to happen everyone is just trying to weather the storm and that’s whats really worsening the situation. I don’t know how great it will be but I’m expecting for us to hit a depression.

  24. 24 el Bouzkouri Youssef May 17, 2009 at 7:43 PM

    This shows that people are still afraid to lose their jobs. With the current unemployment rate, people’s confidence to spend is still very low !

  25. 25 wallacej May 17, 2009 at 7:51 PM

    People arn’t looking to spend money because we are in a recession. Our economy is not at it greatest right now and we need to boost it up in order to get going again. Many Americans are unemployed or are living with little or no extra spending money.

  26. 26 Ally S. May 18, 2009 at 12:29 AM

    This article isn’t too surprising to me. Many people are struggling with these economic times and are focusing most of their attention on their needs rather than their wants. While those 20%, 30% and sometimes even 50% off sales are tantalizing, people nowadays simply cannot afford to spend their money on clothes or other such things. I know that this is a similar case for me. Although I desire new sweatshirts or sneakers, I have other priorities, like buying my summer school books, or paying my monthly phone bill.

  27. 27 Brandon Ruegsegger Macro ECON (M,W,F) May 18, 2009 at 12:33 AM

    Of course people are spending less on “unessential” items. The economy sucks and taxes are being raised (especially in California). Also, unlike previous recessions where policy makers have encouraged the people to “spend their way out” of the recession, the medias and policy makers’ mood has been that of encouragement to conserve.

  28. 28 Andrea Nemeth May 18, 2009 at 2:40 PM

    Higher taxation will totally discourage public spending. People already cannot afford to spend any extra money then they have to. If you raise the taxes then they are having to give away money that they need to get through everyday life.

  29. 29 Leticia Martinez May 18, 2009 at 5:40 PM

    It surprises me that building materials and car parts sales are two areas in which sales actually increased over the last month. However, these are necessary goods. Living in a commuter world, people will always need to keep their cars running so parts will always be necessary and obviously, everyone needs a roof over their head. People can live without buying new clothes, so they do and therefore the clothing market suffers. If people cutback, that market suffers which leads to unemployment which leads to more people cutting back. An endless cycle.

  30. 30 Santi Orona May 18, 2009 at 9:56 PM

    These figures are not surprising, because all Americans are feeling the “pinch”. It makes sense that retail stores would see a decline, because for many those kinds of items are luxuries. People are more concerned with providing necessities for their families, rather than buying a new outfit or pair of shoes.

  31. 31 Stephen Cassinelli May 19, 2009 at 1:41 PM

    It doesn’t seem very surprising that people are not willing to spend their money with the way our economy is working right now. As a this recession continues, our government as well ourselves are going to need to find a way to slowly stimulate the economy. However this isn’t going to happen with people not wanting to spend money. Business’ are drastically lowering prices on cars houses and others are going out of business.

  32. 32 Rachel Sturm May 19, 2009 at 5:06 PM

    Finally, people are learning to live within their means. Its a hrash reality, but the American people need to learn the difference between want and need. I have to go through it to, and I think that going through this recession will only make the current generations less likely to cause another one.
    What I find interesting is how people are cutting back on nonessentuals, yet according to yahoo chocolate sales are going up. I guess no matter what America will always have a sweet tooth!

  33. 33 Pat Kolcum May 19, 2009 at 7:21 PM

    Of course people are going to cut back on buying “luxuries” when they are worried about job security. They are going to try and save all the money they can for what is only necessary such as housing, food, water, ect.

  34. 34 Javier Ochoa May 20, 2009 at 1:44 PM

    I think that something that is stopping people from buying things is taxes. Taxes can force people not to buy as much. And this is something that I think is not that bad. Since we are in a recession, I think that people are afraid to pay more, because no one knows how long this recession is going to take.

  35. 35 jordan May 20, 2009 at 3:33 PM

    My sisters, mom and I own a small clothing boutique in Yountville, and I can say from our own personal experiences these last few months that this is completely true. January and February were very slow, but expected. March picked up and then April dipped again. The retail business is such a tricky thing right now because the retailers are forced on put everything on sale in order to compete, and therefore losing money on the initial cost just to keep it moving. If it continues this way, small businesses like ours will end up losing money in the long run.

  36. 36 Alyssa McKinney May 20, 2009 at 7:51 PM

    This is a problem that’s going to repeat itself over and over. This is why I had a problem with the stimulus packages that sent a check for $500 to all households. People don’t realize that they need to spend that money in order for it to do any good. Just because we are in a recession does not mean that we need to stop spending. On the contrary. In order to stimulate our economy and getting back working, we need to put more money back in the system. All this “saving” that people are doing will eventually default and turn on them.

  37. 37 Carl Hernandez May 22, 2009 at 2:00 PM

    This is how it should be since we are in a “recession”. People are adjusting now and not spending like how they use to. People are learning how to make more wiser choices with there money and what to spend it on. I myself has adjusted drastically with my spending habits and learned to save and purchase what is essential. But i believe this is only a temporary condition just until the economy picks up then its back to the old habits.

  38. 38 wordtown May 25, 2009 at 1:11 PM

    I do think that people will continue to spend less money on things they don’t really need. As long as the economy doesn’t start picking up, neither will spending. I try and spend less on things that I don’t really need, but want. And I’m pretty sure people are thinking the same way. Instead of spending on things we want, we are spending or saving for more important things.

  39. 39 Andrew Curry May 25, 2009 at 7:05 PM

    People will defenitly continue to spend less money than usual becasue the majority of the nation has less extra money than usual. store shouldnt be surprised by this, they should be anticipating this. i hope things start to pick back up again soon. i dont know how muhc longer i can continue to hold back my purchases

  40. 40 Claudio Ramirez May 26, 2009 at 12:20 AM

    It’s of no surprise that consumers spend less during a recession but at the same time i think the media enforces fear into the consumer and has a psycological effect of the spending confidents of the consumer. People need to start spending to boost the economy and of course watch your spending limit but its pretty simple: if people dont start buying people are going to stop making and this recession is going to continue.

  41. 41 quique May 26, 2009 at 10:07 PM

    I work in retail sales and it is hard getting sales for the store when people dont wanna buy anything. This is something that we should maybe start to look at because if people dont buy stuff. then people dont have jobs anymore because there is no need for it.

  42. 42 Kittygirl707 July 13, 2009 at 5:43 PM

    Sooner or later people are going to realize that they don’t *need* a new car or the latest widget that Apple or Nintendo releases. That the clothes they bought last year are still perfectly serviceable and that they don’t *need* new ones. I look around my house and see a frightening amount of “stuff” that I’ve purchased throughout the years – do I really need it? No. Could I have spent it more wisely? Yes. I am hoping that Americans are realizing that amassing a hoard is just a symptom of greed. I’m looking in the mirror and purchasing less and donating more…

  43. 43 Kit t Kat August 6, 2009 at 8:56 PM

    When people’s income fall or they are under financial hardship, their spending tends to fall. Many people are being layed off and incomes are being reduced. The economy is in bad shape especially in California. There is a budget crisies. Consumers are spending more wisely and are cutting out what is not so important. When incomes and financial situations improve, most likely spending will go up.

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