Tuesday morning’s report from the Commerce Department showed that consumer spending was better than expected. It was down 0.2 percent, but if we exclude auto sales, gasoline station purchases, and sales of building materials, then it was actually up 0.3 percent.
Elsewhere, building supplies sales were up 1.2 percent. This is consistent with the weather seen in May. Good weather drives homeowners to undertake home improvement projects and bad weather forces them to do repairs. Either way, building supplies are needed.
That means the overall decline in sales was mostly driven by drops in auto purchases and gasoline station sales. As with the official inflation numbers, the consumer can’t ignore gasoline prices as easily as government economists can.
Shoppers search toy bins for toys at a Goodwill thrift store in Denver.
(Getty Images photo)
Spending is down in almost every major area of the report. Gasoline prices are up but most likely consumers are buying less coffee and cigarettes at the gas station.
One bright spot stood out. The report noted that sales at thrift stores and other merchants selling used merchandise are up by 27.4 percent during the past 12 months.
The popularity of used goods fits with the idea that the consumer is struggling in this economy. CEOs at both Wal-Mart and Target have been quoted as saying that sales are slowing at the end of the month. Both thought this was at least partly due to the consumer running out of money near the end of month.
Stressed consumers may be trying to stretch their dollars by buying used products. This may also be a trend to a new desire to save on the part of the American consumer.
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