With the economy only limping along, Americans are once again being choosy at stores, many of them buying only at deep discounts because they can’t shake uncertainty about their jobs.
Retailers around the country posted a sales increase of just 2.8 percent for July over a year earlier – and at that time, the economy looked much bleaker than it does today.
The July figure, released yesterday by the International Council of Shopping Centers based on results from 31 chains, was the fourth straight month of weak retail numbers. For the most part, economists were disappointed.
Without more jobs, Americans are likely to remain cautious with their spending, restraining the economic rebound, they said. But without more spending, companies will likely be slow to hire.
"To break out of this, we need both employment and consumption to come up together," said Nigel Gault, an economist at IHS Global Insight.
The government will release today its snapshot of the nation’s job market for July, and no one expects anything strong. Private companies are expected to have added 90,000 jobs for the month, not nearly enough for healthy economic growth.
The overall figure is expected to show a loss of 65,000 jobs for July because of the end of temporary positions with the U.S. Census Bureau. Unemployment is not expected to budge much from its current 9.5 percent, and might actually rise.
"With limited hiring by the private sector, it is becoming increasingly difficult for the recovery to be sustained," said Andrew Gledhill, an economist at Moody’s Economy.com.
The stock market finished just about flat a day ahead of the jobs report.
In a reminder of how weak the job market is, the government said yesterday that first-time claims for unemployment benefits rose last week to their highest level in four months.
Claims rose by 19,000 to a seasonally adjusted 479,000. Analysts had expected a small drop. Claims have now risen twice in the past three weeks.
Economists closely watch initial jobless claims because they are considered a gauge of the pace of layoffs and an indication of employers’ willingness to hire. And even at a time when profits are coming back, businesses aren’t very willing.
Pierre Ellis, an economist at Decision Economics, wrote in a note to clients that an "unyielding flow of layoffs" suggests employers are still not comfortable with the size of their staffs.
And with the job market still looking shaky, Americans are in no mood to spend freely.
Abercrombie & Fitch Co. and American Eagle Outfitters Inc., clothing stores that cater to teenagers, are already offering generous discounts on jeans for back-to-school shoppers.
Stores for teens were among the worst performers in July. Winners for the month included Costco Wholesale Corp., which offers big bulk discounts, and department store Macy’s Inc. Even there, though, shoppers are picky.
"I’m buying things that I need now," said Mia Crawford, a freelance language interpreter who was browsing at Macy’s Manhattan flagship store yesterday.
Crawford, who said her own business is down dramatically from a year ago, said she is focusing on buying items on sale or taking leftovers from friends. She left Macy’s with a summer top for $15, marked down from $50.
At Kohl’s, more shoppers bought things in July, but the total price of what they bought and the number of items that they bought fell slightly, "indicating that our customer remains cautious in her spending," said Kevin Mansell, the CEO.