Consumer spending accounts for two thirds of the economy and there is ample evidence that discretionary spending is grinding to a halt. Why should that be a surprise with foreclosures at an all time high, oil prices at an all time high, consumer debt at an all time high and consumer confidence in the toilet. It would be surprise if people kept spending under these conditions.
The guessing game ended this week - consumer spending is slowing down as J.C. Penney became the latest retailer to confirm the trend.The smell of recession is in the air and there will be even more economic pain ahead for the lower and middle classes. Maybe if we are real lucky, those at the top will allow a bit more to trickle down. George H.W. Bush was correct when he called it Voodoo economics, too bad his moronic son didn't have the same sense.
"We're in a very difficult selling environment," J.C. Penney CEO Myron Ullman told analysts Thursday in a conference call to discuss the company's third-quarter results.
"We came out of September expecting a strong start for early fall. That didn't happen. This is the first time that we're seeing a real change in consumer sentiment," Ullman said.
Penney isn't the only one to be disappointed. Earlier this week, Home Depot and Wal-Mart both signaled their concern about a spending slowdown in the months ahead and into 2008. Penney's rival Macy's cut its fourth-quarter same-store sales estimate Wednesday.