Monday, July 12, 2010

Shoppers Coming Out of Their Recession-Built Shells

March saw a 1.6% surge in retail sales this year, one of the contributing factors that is leading economists to conclude that the United States may be recovering from the recent financial crash more quickly than previously anticipated.

Banks are also rebounding quickly; J.P. Morgan Chase & Co. saw a 55% profit gain this quarter, which many see as a sign that investors can be optimistic about the coming year.

For advertisers and retailers, this is good news: consumer spending is expected to grow at an annualized rate of more than 3% in the first quarter. Previous, less optimistic expectations had that number at less than 2% - a nearly 50% increase.

Equally important is what consumers are spending their money on – motor vehicle sales have increased 6.7%, clothing sales have increased 2.3%, and furniture sales are up by 1.5%.

Economists say that consumers generally spend money on these kinds of items when they feel optimistic about the future and more inclined to spend discretionary income. Sales of electronics and appliances are also up 3.6% from the same month last year, though they slipped slightly from February to March.

The one pessimistic point in all these optimistic numbers is the fact that a consumer spending-fueled recovery could indicate that another slump is just around the corner. The recession simply may not have lasted long enough for consumers to have learned their lessons about carrying debt and discretionary spending.

Still, no reason not to enjoy the sun while it shines.