Despite huge discounts and a shopping season that began well before Thanksgiving, holiday shoppers this year just aren’t spending the way retailers had hoped. After slogging for years through a sluggish economy, who can blame consumers for holding tight to their wallets?
There are some signs that shoppers are starting to come back to life. Increases in household income and wealth thanks to raises, rising home values, and a strong stock market are helping boost consumer confidence. Consumers may have a few more reasons to smile in 2014, with lower prices on a host of everyday items.
The CPI inched up just 1 percent in the 12 months ending in October, the smallest 12-month increase since October 2009, and economists expect an increase of about 3 percent next year, although certain categories such as housing may grow at a quicker pace.
With such modest inflation predicted for 2014, any relief for consumers would be welcome. After all, every dollar saved on gas prices or a technology purchase could help a consumer’s bottom line, or maybe help push up the consumer savings rate. In October, that rate stood at 4.8 percent. That’s up from the dismal 2- and 3-percent rates seen before in the years leading up to the Great Recession, but it’s still down from the double-digit savings rate seen in the 1970 and early 1980s.