A Consumer Mystery Explained

Illustration by Mark Alan Stamaty

The latest round of consumer-spending news was good—so good, in the market’s eyes, that stocks had another fizzy day yesterday. The Commerce Department said retail sales rose 1.2 percent in April, a bigger jump than had been expected, particularly given a weak job market. “The consumer is not capitulating,” one retail analyst declared.

Yes, but why is that? Such questions are very difficult to answer, of course. To get an explanation you’d have to ask an Expert, and a couple of Experts popped up on the public-radio show Marketplace last night to shed light on the mystery of the non-capitulating consumer. I’m a semi-regular listener to Marketplace, which is a generally enjoyable show, but even the most thoughtful financial journalism ends up turning to the Experts sometimes. What do we learn from them?

Last night we learned that the “consumers are buying value,” according to retail-trends analyst Kurt Barnard. This is why Wal-Mart and J.C. Penney had positive results to report yesterday—because, Bernard noted, these days, consumers “look for low prices.” Fair enough. On the other hand, another firm reporting good numbers was Tiffany’s, which said its net income was up more than 6 percent partly on the strength of greater sales volume. “Sometimes,” Barnard explained, “a low price can be replaced by the value attached to a wonderful name such as Tiffany’s.”

I see. So consumers like things that are either very cheap or very expensive, but, you know, worth it. Now there’s a fresh insight. It would certainly explain why the retail chain Everything’s Overpriced! is under pressure these days.

Anyway, as if all this wasn’t illuminating enough, another Expert stepped into the spotlight: Ken Goldstein, an economist with the Conference Board. According to Goldstein, “People with money to spend and a willingness to spend tend to spend money.”

Isn’t that fantastic? Don’t you feel smarter now that the mystery of consumer spending has finally been clarified for you? This sophisticated analysis might even apply in other areas. People with food to eat and a willingness to eat tend to eat. People with time to waste and a willingness to waste time tend to waste time. Really makes you think, doesn’t it?

Actually, I guess, maybe it doesn’t.