Is the economy recovering and have we learned to save more as a nation? Yes, I maintain that the country is definitely on the mend economically, even though the outlook for jobs is still bleak.
There are a number of signs I can point to that support my belief about economic recovery. Perhaps at the top of the list is the fact that retail sales numbers for Christmas 2010 have been really good. Traditional retailers are reporting numbers that are up just under 6% (a huge gain), while online sales up are 15% from a year ago. Online sales only account for a tiny portion of total retail sales, though, so the bigger number here is the 6%.
So even though consumer confidence surveys say we’re not feeling like we’re in a recovery, somehow we’re living it. There has been a meaningful recovery under way, except with jobs. Apartment vacancies are declining (meaning more occupancy) and commercial office space in many markets is filling up. Hotel occupancies and airline bookings are doing better too.
In so many areas that involve you and I choosing whether to hunker down or to spend money, we’re choosing to spend. At the same time, Americans are saving much more than we were in the bubble years. (We’re still not saving enough for my tastes, but at least it’s a start.)
Consumer debt levels are down, some of which is based on write-offs from bankruptcy. But the overall effect is that people are choosing to get out of debt and stay out of it. Likewise, the average age of a car has increased in the United States as more and more people decide to ride it until the wheels fall off.
So there are many signs were consuming in a careful, methodical way. The era of “shop until you drop” is over. Why am I talking so much about consumers? Historically, consumers represented 70% of economic output. The fact that we’re voting with our wallets to spend again in different sectors of the economy is a clear indicator to me that recovery is really here.
Except with jobs! The job front still stinks and will continue to do so. It will be a long, slow slog that moves along in fits and starts. The reason is because the excess consumption and excess debt that we had going into the Great Recession always retard any recovery. It takes a long time for people’s personal balance sheets to really be healed, and until they are, businesses are too frightened to engage in much economic activity.