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1.Market Observations, 8.Was Sticky

30 May 2017 (AFR) – Lack of trust, not money, explains soft consumer spending in the US

(30 May 2017, AFR, p29, by Rana Foroohar)

‘There is a paradox at the heart of the US’s lacklustre economy these days. Consumers in America are, according to much-watched numbers like the University of Michigan consumer survey, more “confident” than they have been in years. And yet they are spending less than they have since the Great Recession. They are also increasingly skittish. As Starbucks’ executive chairman and former CEO Howard Schultz has told me, consumer spending can collapse at a moment’s notice, particularly on disturbing economic or political news (anything from race riots to terror attacks to populist electoral battles). Sales will eventually rebound as events move on. But as he and other retailers have told me, the US consumer today is “fragile”, likely to close up their wallet more quickly, and open it more slowly, than in the past. The missing metric that explains all this isn’t economic, but social – it’s about trust. Or more notably, the lack of trust among the general population in what the future will look like, and the ability of…’

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