Back to school sales benefited retailers in August and helped keep retail sales on an uptick for the second consecutive month.
Sales for the back-to-school season often portend how the holiday season will look for retailers. If that dynamic holds true, holiday season results should be positive, but its success may hinge on how well individual retailers position themselves to appeal to value sensitive consumers.
Although consumer confidence softened during the summer months, the pickup in spending is a positive sign for the economy.
Clearly, consumers have adjusted their spending habits in response to the murky economic picture and a tough jobs market. Confidence remains relatively low, which is showing up in the increased emphasis on personal savings and debt reduction.
Nonetheless, the better-than-expected retail sales report provides additional reason to believe that perhaps the slowdown in the economy will prove to be just that and not a prelude to a double-dip recession
Consumers remain the 800-pound gorilla in the room, accounting for over two thirds of economic activity. This report suggests that, at least for the month of August, they played their role well.
Many headwinds still exist that consumers will need to overcome for the recovery to be sustained, but today’s news is a positive indicator that they are doing that.