Retail Giants, Consumer Spending Under Wall Street Spotlight

A recent survey carried out by Citigroup noted that 52 percent of consumers interviewed agree that the recession has changed the way they spend, as well as the way they save – cutting the spending, and increasing the saving. However, a similar survey a year ago revealed that 60 percent felt this way, with the general consensus being that there is a strong possibility that the majority of consumers will gradually slip into their old ways of spending. This is supported by the latest data from the Commerce Department which indicates that personal income and spending rose in December 2010, while personal savings declined. Furthermore, the Federal Reserve disclosed that revolving consumer debt climbed in December for the first time in 26 months.

Decembers consumer spending data is undoubtedly a reflection of the holiday season, and the increase in retail sales in January may be attributed to post-season sales, but it appears that consumer sentiment is becoming more positive, or at least that consumer fear is receding. With consumer spending being the backbone of economic recovery, investors will be keeping a keen eye on consumer sentiment and spending trends. Consumers may have been quick to cut back in tough times. Conversely, they may be just as quick to start spending when the tough times start showing signs of abating.