As the winter months approach, U.S. consumers continue to feel the pinch from rising gasoline prices, tight credit conditions and the weakening home values market. The Commerce Department recently released data that shows a sluggish gain of 0.2 percent for retail sales in October while the Consumer Confidence Index continues the steady fall it has seen since August. The CCI now stands at 95.6, down from 99.5 in September.
Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer Confidence posted its third monthly decline and continues to hover at two-year lows (Oct. 2005, 85.2). Further weakening in business conditions has, yet again, tempered consumers’ assessment of current-day conditions and may very well be a prelude to lackluster job growth in the months ahead. In addition, consumers are growing more pessimistic about the short-term future and their rather bleak outlook suggests a less than stellar ending to this year.”
Despite the cloudy forecast of late, there was some good news for consumers and it came from an unlikely source – AccuWeather. The private weather forecasters are predicting one of the mildest winters in years for most parts of the U.S. and with that will lower home heating bills. Crude oil and heating oil futures slid in New York trading last week after a report by an international energy advisory body that high petroleum prices would curb demand here and abroad, which in turn, would ease concerns about supply shortages and could lead to lower prices. In the short term, however, oil prices have risen and experts claim a decrease would more likely occur early next year. Crude oil has risen by more than 50 percent this year and reached a record $98.62 two weeks ago.
With the all-important holiday selling season in full swing, many consumers may be shopping with a more frugal eye than in the recent past but at least one retail analyst claims the numbers for Q4 won’t be as dramatically affected as many are claiming.
“While retail sales growth won’t be as robust as we all hoped it would be, it won’t be a disaster either,” began Lauren Sosik, a retail analyst out of New York. “Consumer spending will undoubtedly be a bit restrained in most areas. Consumers are spending cautiously in certain areas like on their houses and with really big-ticket items. In the CE/Imaging sector indications are they are driven by the innovation they are seeing and if a particular product both fits into and enhances their lifestyle, they are buying.”