An economy and upcoming retail holiday season already rife with uncertainty has plunged into further grimness after the Sept. 11 terrorist attacks. Throughout the year, economists have credited consumer confidence with keeping the weakening economy from sliding farther. That ray of light, however, took a blow in the weeks after the attack. As the stock market stumbled, The Conference Board released that its consumer confidence index, a leading economic indicator, fell to 97.6–the lowest since 1996 and the largest one-month drop since 1990.
Not only retailers sales, but the country’s ability to keep out of a recession, depend–in large part–upon the recovery of consumer confidence. The past resiliency of consumer confidence and spending, however, is fueling economists like NRF Chief Economist Rosalind Wells to remain confident for a recovery in early 2002. “Recession remains a possibility, however we feel that the strong underpinnings of the U.S. economy and the resilience of the U.S. consumer will force the stalling growth over the next few months to give way to a rebound beginning next year,” says Wells. While luxury products were showing signs of struggle before Sept. 11, luxury firms like LVMH and Richemont have now announced expectations for a bleaker-than-anticipated holiday season.
In jewelry, however, many retailers said they are hoping the emotional mood of the country right now will reflect an in increase in items like diamond engagement rings and other sentimental jewelry gifts. Even luxury goods analysts are looking to jewelers to be one bright spot among retailers this holiday season. According to KPMG news, for example, Morgan Stanley luxury goods analyst Claire Kent named Italian jeweler Bulgari as being less sensitive to the falling economy than retailers of other luxury goods.
The National Retail Federation lowered its fourth-quarter sales projection, yet still predicts an increase in retail sales this period. The NRF lowered its optimistic projection to 2.2 percent from 4 percent.
While the weeks following the terrorist attacks were marked by consumers buying little more than basics, sales are expected to return to a more normal pace as daily life resumes in the weeks ahead.
“With a few notable exceptions, such as American flags, consumers are currently focusing on basics, buying out of necessity not desire,” said NRF President and CEO Tracy Mullin. “We expect consumer spending patterns to begin to return to normal levels as the holiday season approaches.”