So, it may be true that the economy is bottoming out. It may well be true that the economy is poised for a recovery.
But as long as job losses continue and hiring remains a thing of the past, then consumers will believe what the jobs losses say to them.
And it’s an unmistakable directive: Stand pat and hold on to what is dear.
Consumer spending drives 70 percent of our economy. Obviously, any recovery must include a recovered consumer.
But what we see is a consumer still hunkered down, saving more than ever, paying down debt and spending far too little to ignite a sustainable recovery.
Real consumer spending, after adjusting for inflation, dropped again in June, the third drop in four months.
No surprise there: income, however your measure it, is down. You don’t need an economist to explain that. See unemployment numbers.
“Confidence is the main driver of consumer spending, and they aren’t going to be confident until we see jobs improving,” says Georgia State University marketing professor Ken Bernhardt.
Until that happens, we’ll continue to get disappointing retail sales reports, as we did last week.
Once we emerge from this forced march into history, what will the consumer behave like?
The wealth destruction wrought by the Panic of 2008 has forever changed some of us.
Those baby boomers 10 years out from retirement age, say ages 53 to 63, have seen lifelong plans blow up, Bernhardt says.
Even as their 401(k)s recover and the price of their homes stop declining, they will never be the same consumers.
They are what is driving the savings rate – more than tripling since the Great Recession began.
The recent rise in the stock market gives them hope they can rebuild their retirement nest eggs, Bernhardt says, which means they will keep saving at a significant rate, lessening their contribution to the spending necessary for a robust recovery.
The recovery in consumer spending may have to depend on the younger generation. Those too young to have had a nest egg or 401(k) or even a home that could lose value.
Some of our young are emerging from college to find jobs hard to come by; others were some of the first to be laid off.
But as this younger generation lands jobs, they will have spending money and they will spend it, Bernhardt says.
We have taught them well.
Thomas Oliver writes a business column. He can be reached at email@example.com.