What our shopping choices say about the US economy: NPR

Macy’s, the nation’s largest department store chain, has lowered its sales forecast for this year.

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Wilfredo Lee/AFP

Macy’s, the nation’s largest department store chain, has lowered its sales forecast for this year.

Wilfredo Lee/AFP

Shoppers make fewer purchases and fewer trips to stores. But when they log out at the register, they often spend more, revealing the effect of inflation. Many low-income shoppers cut back on non-essentials like home décor and spend big at discount dollar stores..

These are some of the points from a batch of mid-year financial report cards released by major American retailers, including Walmart, Macy’s and Dollar Tree. It reflects the deep uncertainty that has gripped the US economy, with inflation hitting its highest rate in decades.

Store chains Messi and NordstromBeside Victoria’s Secret This week he joined a growing list of retailers who have lowered their expectations for the rest of the year. Companies reported fewer shopper visits than last year, although some retailers, including home goods seller Williams-Sonoma on Wednesday and Home Depot last weekcontinued to report increased sales despite slowing traffic to stores.

The two companies reported Thursday that inflation at Dollar General and Dollar Tree was a result of increased sales, as shoppers sought cheaper groceries, smaller packages and more deals on essentials.

Some retailers who have seen a drop in sales have blamed their race for discounting and selling junk inventory: An unexpected abundance of things like pajamas and kitchen utensils Which was so hot in the pandemic that shoppers suddenly became more interested in travel and outings to restaurants.

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People are still shopping

All this comes against the backdrop of the massive and record-breaking shopping spree that marked 2020 and 2021. This year, with the lifting of pandemic restrictions, people are back to experiences rather than things. Then, as gas and food price inflation increased, more shoppers began switching to private brands or skipping discretionary items.

In surveys, people say they are very concerned about finances. However, in July, retail sales, when adjusted for inflation, Has risen Compared to June and July 2021 where prices are somewhat lower.

“Every metric I see is that the economy is very resilient,” said Sucharita Kodali, an analyst at Forrester, citing rising wages, lower unemployment, decent levels of savings and retail spending still above pre-pandemic levels. “Retail spending, even despite inflation, is at a record high.”

Shoppers ‘under pressure’

This week, Macy’s, the largest US department store chain, lowered its full-year forecast. The company said its shoppers are not switching to less expensive brands, as other retailers have noted, but are looking for discounts and prioritizing purchases such as office wear as more people return to the workplace in person.

The consumer “is actually still healthy, but he’s under stress. The wage rate is not keeping pace with the pace of inflation,” CEO Jeff Jennett Tell Bloomberg On Tuesday, indicating that upscale shoppers were less affected and luxury goods were selling well.

Kodali points out that many retailers—particularly department stores—have faltered long before the pandemic, particularly with the decline of many malls and major brands racing to sell directly to online shoppers.

Wells Fargo economists warn that back-to-school shopping has been a major factor in increasing retail spending in recent months.

“Once the kids are back in school and the bills are due, families will start tightening their belts,” the company wrote. In last week’s report. “Even as inflation shows signs of abating, it will only do so slowly.”

Meanwhile, Walmart — whose massive footprint and low prices make it more of an economic leader — has changed its face from warnings for the rest of the year to point to better times ahead.

In July, the company Wall Street warns of falling profitsbecause people’s high grocery bills made products in other aisles less attractive. But last week, Wal-Mart improve her forecastnoting that its stores were attracting more middle- and high-income shoppers.

Amazon, Walmart’s biggest competitor, for its part, said last month No inflationary effect on demand was ever observed, with the company’s shoppers continuing to spend more.

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