Three key reports which came out yesterday – MBA Mortgage Application Survey, ICSC-Goldman Store Sales, and the FRB Beige Book – indicated that consumers, while worried about the economy, are still willing to spend money for cheaper purchases.
- MBA Mortgage Application Survey - The composite results for the week ending September 2 are down 4.9% W/W and down 35% Y/Y. These negative results are moderated slightly when we look at the composite week on week results closer. Refinances were down 6.3%, but new purchases were actually up 0.2%.
- ICSC-Goldman Store Sales - Sales were down 0.7% W/W, but remain up 2.7% Y/Y. The report points to lasting effects of Hurricane Irene as the cause of this decline due to stockpiling of supplies from prior weeks. The prior week had shown 0.1% W/W growth and cited good back-to-school sales, which had been slow to begin. Of note is that they anticipate an increase of 4-5% for the month of September.
- FRB Beige Book – Five districts have shown modest or slight growth, four districts have shown slow or sluggish growth, while three are showing mixed results or have slowed. The report states that consumer spending has increased slightly in most districts, and that there is a general positive demand for services. The report claims that consumers are nervous, yet still spending money.
These results are undoubtedly mixed, however the evidence shows that consumers are still spending money but are avoiding larger purchase. Mortgage applications are down – notably refinances – indicating an aversion to spend large sums of money. Supporting this are the results of back-to-school sales, a large expenditure for most families - we see that people delayed spending the money, but once they got started, these sales have done quite well. Consumers are still spending money on smaller purchases as primarily evidenced by the Beige Book and Y/Y results of the ICSC report, and while the ICSC reports down sales, these are partially explained by Hurricane Irene and countered by the evidence in the Beige Book, and directly countered by the anticipated results for the month.
Consumers have many reasons to be nervous, yet so far their nervousness is only preventing them from making large purchases.