Back to buying
Without strong retail sales, economic recovery is impossible. But are consumers confident enough of the future to start spending again?
“Consumers today have a much more positive view toward the economy and toward their personal situation than they did a year ago,” says chairman Arthur M Wood of Sears, Roebuck and Co, the nation’s largest retailer. “Many consumers have paid down their installment debts and at the same time their disposable income has improved. Also, the fact that inflation declined sharply in the closing months of 1975 has done a lot to restore consumer confidence. As a result, we can expect that consumers will be more aggressive in their buying, particularly in the first six months of 1976.”
Jay Schmiedeskamp, who heads the University of Michigan’s consumer-attitude surveys, is not quite so upbeat. “Consumer confidence has improved substantially from what it was a year ago,” he says, “but it’s been a slow climb and it’s still very low. You must realize that what the economy went through — and, therefore, what consumers went through — was an extraordinary thing. People were shocked at what happened to them; the level of confidence we measured a year ago was extraordinarily low — lower than I would have thought possible outside of a major depression. It takes time for consumers to crawl out of a hole like that, to get their balance sheets back into shape, so to speak, so they can resume normal patterns of spending.
“Almost everyone knew somebody who went through the unpleasantness wishing they’d had a higher level of savings,” Schmiedeskamp says. “In our latest survey we found that 71 percent – a record – think it’s especially important to save money now. But as things get better, attitudes will begin to improve. 1975 was a year of healing as far as personal financial attitudes were concerned, and the trend’s still up. There won’t be so much bad news about a slump to reinforce worries about the economy. What’s more, this is an election year — and consistently since World War II, we’ve found that in the first quarter of such a year people begin to feel that there will be good times simply because the politicians will feel obliged to do something.”