Consumer debt reached a new high in Q1 – passing $17 trillion for the first time ever. Consumer sentiment took a nosedive in May, dropping over 9% MTM, hitting its worst level since the historic low last June; consumers are worried about the economy amid a rash of negative news – especially concerning the standoff regarding the debt crisis standoff.
April retail sales increased just 4.3% (well below core inflation rate of 5.5%), and most key retail segments experienced YOY sales.
Even with good news on the inflation front – retail gas prices continue to decline, down 18% YOY to $3.64 – the current economic environment and low consumer sentiment is impacting how much consumers are willing to spend on non-essentials; retailers will need to sharpen their promotional focus, optimize inventory allocation, and closely manage expenses in the months ahead.
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