Consumers Break Some Ice On Home Spending

One of the surefire indicators that confirmed the U.S. recession in 2008 was when consumer spending fell through the floor. A significant component of this rational behavior involved individuals freezing their spend on new home goods like furniture, optional appliance replacement and even deferring home maintenance. According to this morning's WSJ there's evidence that despite an uptick in consumer pricesof "1.8% last month over November 2008", there is also evidence that consumers have begun to resume buying for their homes.

In an unrelated article, The Journal reports that "Best Buy Co. said this week that its sales of appliances in stores open at least a year rose 10% last quarter, the first quarterly increase in more than two years. Home Depot Inc. and Lowe's Cos. have also been moving more appliances [and] Williams-Sonoma Inc., which owns Pottery Barn and its namesake stores, posted its first same-store sales increase in two years in November and said it is chasing additional inventory across all categories." Additionally "Home-decor and furnishings were among the strongest sales performers in November at TJX Cos. HomeGoods chain, which posted an 18% gain in same-store sales."

The Journal attributes this ice breaking in home buying to a number of factors including "federally-funded rebate programs for energy-efficient appliances, ... retailers' and manufacturers' marketing promotions, ... [and] federal homebuyer tax credits". While these incentives have undoubtedly contributed to the increased sales, it's also important to remember that we are a consumer society and will not voluntarily stop buying for long. One shopper quoted said "It was something we couldn't pass up ... it was an incredible deal". So let's hope we're beginning to "deal" ourselves out of recession and holding those cards -- debit, not credit mind you -- a bit further from our vests.

William Busch

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