WASHINGTON — Discount and necessity purchases characterized consumer spending in most regions of the U.S. last month, according to the Beige Book released by the Federal Reserve today.
The Beige Book, based on anecdotal reports from the Fed’s 12 districts, found economic activity continued to grow modestly in late summer. But there were signs the pace is slowing.
Boston, Cleveland, St. Louis, Minneapolis, Kansas City, San Francisco and Dallas all reported slight economic growth or positive developments compared with the previous reporting period. New York, Richmond, Chicago, Philadelphia and Atlanta all said conditions were mixed or there was a general deceleration of economic activity.
Overall, consumer spending reports “were mixed, but suggested a slight increase on balance,” the Beige Book said. Most districts reported an emphasis on necessities, lower-priced goods and discounted items. Back-to-school purchases in some districts focused mostly on immediate needs.
One retail contact in Boston said “flat is the new up,” pointing to b-t-s shopping focused on necessity. New York retailers reported substantial discounting, particularly at clothing retailers and heavy discounting also drove clothing sales for Chicago stores. Merchants in Philadelphia said apparel sales were “relatively healthy,” but they were also driven by discounting.
“We are in a recovery, but it will not get stronger until employment increases,” said a Philadelphia store executive. Richmond retailers said apparel sales were “erratic,” but early b-t-s sales were “at least satisfactory.” Department store contacts in the district said they were concerned about soft holiday sales.
Chicago retail sources said higher and lower-end stores fared better than mid-market outlets, with consumers trading down to lower-price alternatives.
Retailers in Kansas City said sales of luxury items like jewelry were weak, but clearance items were selling well. Retail contacts in most parts of the country said they were pleased with inventory levels.