Why are U.S. retail sales down by more than the decline in personal income? Part of the answer, as a Reuters story explains, can be seen by looking at who is unemployed. Employers are giving an unusual degree of preference to experienced workers, leaving many workers with less than ten years of experience — who are mostly under 30 years old — out in the cold. Employment has fallen about 25 percent among workers 16–19 years old and among males 20–29 years old.
This is bad news for retailers, because younger people are more reliable shoppers. By the time people get to be 30 or 40 years old, they have had years to accumulated personal possessions, and typically have all the possessions they can use, with plenty to spare. Younger shoppers do not have the same level of material affluence. A 20-year-old, for example, may go shopping to buy a second pair of shoes. But with younger shoppers taking a huge hit in income because of being unemployed in such large numbers, they don’t have the money to spend, and retailers are feeling the effects.
Conventional thinking going into this month was that it wouldn’t matter how much most of us spent at retail, because a resurgence in confidence among multi-millionaire households would make up for all the spending that the sub-millionaires among us were not doing. So far, there is no sign that this is happening. Last year’s decline in jewelry, high-end departments stores, and luxury goods is continuing this year. Multi-millionaries may be more confident, but that doesn’t mean they need to buy anything.
