Retail sales are a strong gauge of the economic recovery, and Christmas shopping points to increased consumer confidence in economic growth. That’s especially true for the sales of high-end designer goods with brand names such as Louis Vuitton, Jimmy Choo and Rolex. From the LA Times:
U.S. retail sales overall are expected to rise about 3.5% this year, but the trend is even stronger at the high end, with a projected 7% jump over 2009.
That’s an encouraging sign for the overall economy because affluent shoppers wield outsized spending power. The richest 20% of households account for nearly 40% of total consumer spending in the U.S., said Michael Niemira, chief economist at the International Council of Shopping Centers.
Their pent-up desire to spend money is being abetted by the stock market rally, a more stable jobs picture for those who are still employed, and expectations that the economy will continue to show steady, if slow, improvement.
Note Added: (Before any of you who defend tax cuts for the rich get too excited about that 20 percent of households, that’s not the same group that the GOP is defending with tax breaks. The richest two percent of households earn over $250,000 a year. The wealthiest 16 percent earn over $75,000 a year.)
In recent weeks, some of the nation’s best-known luxury retailers, including Neiman Marcus, Saks and Nordstrom, have reported a surge in traffic and sales.
But there is a cultural and economic downside to Americans’ love of “retail therapy”: Our economy is too dependent on consumer spending. For the last 20 years or so, as manufacturing has declined, consumer spending has accounted for 70 percent of U.S. economic activity. The U.S. no longer has an economy shaped by building and making; our economy is all about buying the things that other countries make.
Our savings rate is also out-of-whack. While household savings rose a bit during the grim recession, we are still a spendthrift nation, spending the money we should save for college educations and retirement. A higher household savings rate would also lend businesses much needed money for investment.
It’s the classic problem with addiction: A too-quick withdrawal from our spending habits would cast the U.S. economy over the cliff, without any other engines to create jobs. But we can’t continue as a spend-spend-spend economy, as our latest bust shows.
But a southern California shopper summed up the attitude all too common among Americans:
Over at Christian Louboutin, Lefty and Cindy Novotny of Coto de Caza are walking out with a pair of black leather pumps for their daughter. Price: $630.
“People are sick of saving — it’s not fun,” said Cindy Novotny, 54, who co-owns a consulting firm with her husband. “2009 I shopped in my closet, and I said I’m over that.