Heading into the last half of August, back-to-school shopping is well underway, Halloween displays are already up at big box stores, and retailers will soon start promoting early sales for the holidays.<\/p>\n
So, where is the American consumer through all of this? How are they doing financially? How are they feeling about what they have to spend, and what they can afford to buy? Well, the data isn\u2019t looking great.<\/p>\n
Consumer sentiment took a tumble in early August,<\/a> according to preliminary results for the University of Michigan\u2019s survey for the month, driven principally by rising energy prices as the war in Iran heated up. July retail sales were pretty lousy \u2014 down more than half a percent from June. And AAA reported the average price of a gallon of regular gas nationwide at $4.06 a gallon<\/a> on Monday, near a record high for August.<\/a><\/p>\n A lot of economic warning signs were flashing red after the sharp pullback in consumers\u2019 retail spending in July.<\/a> <\/p>\n \u201c(But) this is a one-month report, and you had pretty strong numbers all throughout the year,\u201d said Jeffrey Roach, chief economist at LPL Financial.<\/p>\n However, Roach admitted some categories of discretionary spending have started to weaken. <\/p>\n \u201cHotel occupancy rates, TSA throughput \u2014 because travel is a leading indicator for how consumers feel,\u201d he said.<\/p>\n The job market has also weakened,<\/a> and wage gains have started to fall behind overall inflation, said Joanne Hsu, director of the University of Michigan surveys. <\/p>\n \u201cOnly 8% of consumers believe that their income growth is going to exceed inflation \u2014 that\u2019s really not very many people at all,\u201d Hsu said. \u201cWhat we\u2019re seeing is that consumers are expecting to be squeezed. They\u2019re not anticipating anything catastrophic.\u201d<\/p>\n What that means going forward is probably that consumer spending doesn\u2019t fall off a cliff, but it doesn\u2019t rebound to stronger levels from earlier this year, either. <\/p>\n