Brands Now Betting On Revival Of Consumer Spending

Unemployment remains stubborn, so businesses are hoping for the next-best thing: a return of strength in American consumer spending. And they’re seeing signs of just such a thing in the latest figures.

Indicators of the tenor of the US economic recovery remain uneven. The jobless rate is stuck at 9.7 percent, while the number of long-term unemployed continues to skyrocket. The housing market remains shaky, not to mention commercial real estate. And personal income has ticked up, but not by much.

But it appears that all of those things may no longer matter to consumers. Nascent signs of a revival in spending are proliferating, ranging from a March surge in new-car sales – including Ford, Toyota, and GM – to seven consecutive months of growth across the total retail industry. So the nation’s retailers, such as Nordstroms, Saks, and Abercrombie & Fitch, are ordering more merchandise.

Why would consumers with stagnant incomes and uncertain employment prospects begin spending more money? Some of them are just tired of saving more, analysts suggest. Some have shed debt and feel freer to hit the malls than a year ago. Wealthier consumers seem more comfortable strutting their stuff nowadays. And there are those continual suggestions from the news media that happier financial days are at hand.

The big question, though, is whether this modest rise in spending will be sustainable. If unemployment doesn’t begin to ease soon – and even the Obama administration is saying it won’t – the recent momentum could be lost easily. The return of $4-a-gallon gasoline, which some analysts are foreseeing this summer, could also throw a monkey wrench into things as well.

So the head game by and with American consumers continues. And brand executives had better hope they’re good mind readers.