NEW YORK (TheStreet) -- Abandon any hope for summer splurging as this season's biggest retail trends may include saving scraps of tin foil and dancing for nickels, according to consumer confidence reports.
and such retailers as
indicated this would be the summer of the spendthrift.
Those forecasts faded like a tan during an overcast vacation week as consumer confidence evaporated and retail sales swooned. Today's announcement that the Consumer Confidence Index for July fell 3.9 points to 50.4 after a 9.8-point collapse in June was just the latest grain of sand added to a shoreline's worth of summer spending concerns.
The season kicked off with the Commerce Department reporting a 1.2% drop in retail spending in May that included cuts in clothing, car and building-supply purchases. The Reuters/University of Michigan Index of Consumer Sentiment shrugged off the loss at the time, noting a 1.4-point uptick in its main indicator and 2.3-point gain in consumer expectations and predicting "financial gains among upper-income households will continue to foster growth in overall consumer spending."
Then came a 0.5% retail dropoff in June and its concurrent freefall in consumer confidence. Again, however, consumer sentiment rose 2.4 points and expectations were rosier, despite Reuters and the University of Michigan forecasting slowing growth into the start of next year. A month later, those sentiment numbers would plunge to lows not seen since August 2009.
So where did that consumer confidence go? Where are the shoppers American Express' Spending and Savings Tracker surveyed who said they planned to spend 63% more on summer outings and 44% more on apparel? Why didn't the 14% increase in spending
saw among its shoppers this month translate to an empowered buyer base?
Reality is getting in the way.
The Consumer Confidence Survey found a 2.4-point increase among respondents who said current conditions are bad, a 2.3-point advance among those who said jobs were hard to get, a 1.2-point drop among those who expect conditions to improve during the next six months and a nearly 2-point decrease among those who expect to see more jobs created in the months ahead.
Meanwhile, an otherwise optimistic
saw its sentiment index stall this month after creeping upward all spring, with 16% of consumers unable to afford health care, 10% missing a major bill, 8.9% percent losing or reducing health-care coverage and 1.3% seeing their homes go into foreclosure.
Even the big spenders American Express surveyed were feeling somewhat less confident, as a respondent base looking to put away an average of $14,000 this year revised that to $12,000 amid increasing uncertainty. And why shouldn't they? Exactly which part of the retail marketplace inspires confidence?
were stocking back-to-school products before the first Fourth of July fireworks fuse was lit. Shoppers headed to
Toys R Us
and K-Mart stores best bring some holiday spirit, as those retailers are starting "Christmas Club" savings plans and Black Friday-style sales
These outlets will balk, saying such sales are just tweaks in the retail calendar, but there's palpable tension as American Express says 75% of its consumers refused to take on more debt during the past six months.
With the 8.5 million jobs lost during the recession being replaced at a glacial pace, and Americans freezing debt and spending until their financial situation stabilizes, it's going to take a whole lot more than summer sun to thaw consumer sentiment.
-- Reported by Jason Notte in Boston.
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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.