Today’s retail sales reports show a slowing economy. Same-store sales were typically down 5 percent from last year. JCPenney has effectively already begun its year-end clearance sales, after loading up on a little too much winter merchandise in September, and it is a similar story in some high-end department stores. In a boom year, these markdowns might not happen until a few days before Christmas. Sales at Gap are down 16 percent from a year ago, though Gap says its sales are in line with its forecasts and it has appropriate inventory levels.
If you want to see why U.S. consumers are not in a spending mood, you don’t have to look any farther than the employment statistics. Nearly half a million workers are filing for unemployment benefits every week. A month ago, we could blame many of those job losses on the hurricane season. Now there are no hurricanes to blame. Roughly ten million workers have been unemployed so far this year, some of them multiple times. It is no wonder if consumers are feeling cautious.
Not all the people who lose their jobs can go on to get other jobs quickly, so the economy is shedding jobs at a rate that must be at least half a million jobs a month. Evidence of this is the number of people receiving unemployment benefits: approaching 4 million, a number we haven’t seen since the Reagan recession.
The cliché is that consumer confidence is down because workers are “worried.” That’s why you so often see politicians trying to make people feel better about the strength of the economy. But when friends and family members are losing their jobs, it’s not just a feeling. People know they have to cut back.