2001

U.S. Consumers Defy Wall Street Projections, Japanese Falter

June 2001

While U.S. retail sales rose more than forecast in April, data shows that consumers continued to spend, as their Japanese counterparts’ confidence slipped further.

Though a small increase, consumer spending in the United States nonetheless rose in April. Overall U.S. retail sales in April rose .8%, compared to the same period year, defying projections by Goldman, Sachs’s estimate of .2%. Shoppers spent the most at discounters like Wal-Mart, which saw a 6.5% sales increase.

Sales were also up, however, at department stores, including Federated and J.C. Penney. Specialty retailers, including the Gap and Ann Taylor, also beat Wall Street estimates for the quarter, showing consumer resilience in the face of declining economic conditions.

Consumers of luxury products, however, continue to curtail their spending. Luxury stores like Neiman Marcus and Saks saw declining sales and jewelers reported that customers are buying, but spending less per purchase.

The slowing in luxury spending falls in line with a further slump in U.S. consumer confidence, which is at a 4 1/2 year low, due largely to employment concerns.

Consumers in Japan, meanwhile, are not showing resilience to the economy, as confidence continues to plummet and 31% of those polled expect the Japanese economy to get worse within the next 6 months, according to the Prudential Japanese Consumer Confidence survey.

The survey revealed the lowest confidence among Japanese consumers in the history of the survey, which began in 1999. Germany and France also showed declining economic indicators.