WASHINGTON — The arrival of stimulus checks in May and June could not counteract the overall slowing effects of economic pressures on U.S. consumer spending, according to the Federal Reserve Board’s Beige Book report.
This story first appeared in the July 24, 2008 issue of WWD. Subscribe Today.
The tax rebate checks had little or no effect on most consumer goods, with almost all of the 12 districts tracked by the Fed reporting slowing or weak sales. The anecdotal report, released on Wednesday, said “consumer spending was sluggish or slowing in nearly all districts, although tax rebate checks boosted sales for some items.”
Electronics in particular got a small sales boost in some regions from the rebate checks, the Fed reported, but many consumers spent the extra cash on essential purchases like food and fuel. Sales at stores selling discretionary items, like apparel and housing related goods, were especially weak, the districts said.
Most retailers in Boston said there was a sales downturn in May and June, with inventory levels in the region reported to be down in response to softening sales. Some retailers said they were reducing head counts, as well.
Conversely, inventory levels were high for San Francisco department stores and smaller retail outlets due to soft sales. Discount chains reported small sales increases and continued to outperform conventional department stores, the Beige Book said.
“As in other periods, respondents pointed to increases in food and energy prices as a restraining factor on sales of other products,” the report said.
Retailers in New York said sales were mixed, but generally stayed close to plan in July. New York City in particular reported “continued brisk business.” Compared with a year ago, sales were up slightly, driven mostly by increased purchases of seasonal apparel, retailers reported. However, one major retail chain said that while costs for holiday season merchandise had not increased substantially, the costs for spring 2009 items were showing “some significant escalation.”
Philadelphia reported increased sales at discount stores, but tax rebates gave a boost mostly to electronics and appliances. Discounters in Richmond reported an increase in sales of grocery and entertainment items.