Tuesday, December 2, 2014

Black Friday Revealed How Poor Americans Really Are

http://www.msn.com/en-us/news/money/black-friday-revealed-how-poor-americans
-really-are/ar-BBgfoGq


After weeks of declining gas prices, many analysts predicted the biggest
holiday season ever.

Instead, sales rose only 8%, falling short of many predictions.

So where are the customers?


Macy's CFO Karen Hoguet told analysts that consumers today have priorities
other than clothing and housewares.

"Shoppers are spending more of their disposable dollars on categories we
don't sell, like cars, healthcare, electronics and home improvement," Hoguet
said in a call with investors.

The stores that did remarkably well on Black Friday, such as Family Dollar
and Kohl's, are all deep discounters, according to a recent Deutsche Bank
report.

The success of discount retailers shows that Americans are more concerned
about spending money than ever.

Wal-Mart provided few details about results from the weekend, a possible
sign of bad news, the Deutsche Bank analysts wrote.

Many Americans are watching their spending despite lower gas prices, writes
Lindsey Piegza, chief economist at Sterne Agee.

"Consumers are increasingly familiar with energy price reprieve from summer
gas prices and no longer adjust their long-term spending habits as much, or
at all, based on short-term price fluctuations," Piegza writes.

And while gas prices are lower, the benefit is offset by higher housing and
utility costs, according to Piegza.

Health insurance premiums have increased between 39 and 56% since early
2013, meaning additional costs of $230 per month for the average family.

The lackluster job market is also contributing to poor holiday sales, Piegza
writes.

"With uncertainty lingering and patience wearing thin after 5+ years of
still lackluster wage growth, consumers are increasing saving for the
future, hedging against a continuation of 'more of the same,'" according to
Piegza. "Thus, for many, extra savings at the pump as a result of lower gas
prices are simply being stored away to help supplement spending needs in the
future, ramping up savings, not spending."

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