Consumers are taking a breather from heavy spending, but it's not as if they're dropping out of the recovery race. The fast pace of national retail sales in May and June slowed a bit in July, and August sales are expected to be even with, or slightly below, July's. Department of Commerce data for August were released Tuesday, but were not available at time of writing.
This end-of-the-summer lull settled in because ''the recovery was so strong in the second quarter, consumers couldn't maintain that pace without spending themselves into oblivion,'' says Ralph Semprevio, an economist who studies consumer markets for Chase Econometrics.
Laurie Landy, an economist at the Conference Board's consumer research center , agrees. ''People are catching their breath . . . but there's no reason to be gloomy at all,'' she says. The July tax cut, a better-looking employment picture , and strong consumer confidence in the economy will keep consumers buying, Ms. Landy explains. Besides, ''What we're aiming for is a sustained recovery, not a big burst of enthusiasm,'' she adds.
The main item weighing down the national sales figures is the automobile. Take auto sales away, Mr. Semprevio points out, and you have no sales decreases at all over the summer. And lower auto sales are partly due to supply problems, not consumer unwillingness, though Semprevio points out that interest rates and the absence of special automaker financing had an impact, too.
In August, major department store chains reported double-digit sales increases compared with the same time last year. K mart chairman Bernard Fauber said sales were up 16.3 percent and that back-to-school buying began earlier this year - ''another sign that consumer confidence is gaining momentum.'' He is ''optimistic'' about the rest of the year.''
At Associated Dry Goods, August sales were up 22 percent from the year before , says Philip Bradtmiller, director of investor relations. The company owns both discount department stores and higher-priced chains, but Mr. Bradtmiller says that ''sales gains out of the top five upscale store divisions have been continually, substantially above the department store average for the company.'' Stronger sales started with the upper-income segment and have been working their way down, he observes. It was the stock market boom last year that gave upscale customers so much buying power, Bradtmiller reckons, while the rest of the customer base has ''for the most part been dependent on improvement (in salaries) and employment.''
But department store analysts - and executives - also point out that these hefty sales increases have a lot to do with new stores that have been added to the chains in the last year. Without the new stores, the increases are more in the 7-to-10-percent range.
Fred Wintzer, retail analyst and vice-president at Lehman Brothers Kuhn Loeb, doesn't think department store sales are a true barometer of recovery. ''They are by no means a growth sector in retailing . . . people didn't stop buying apparel in the recession.''
But people did stop buying big-ticket items. Pocketbooks snapped shut on appliances and furniture. The best recovery indicator for retail, Mr. Wintzer says, ''is the hard-goods stores, where there has been pent-up demand.''
The news in this segment has been good. Appliance sales took off with the upturn in the housing market. From the first of the year through July, electric range sales are up 25 percent from last year, refrigerators are up 13 percent, and air conditioners are up 75 percent, says Robert Anderson, spokesman for the National Association of Retail Dealers of America, with members mostly in the appliance and electronics business. The heat wave and housing starts pushed the goods out of the warehouses fast, says Mr. Anderson, who expects the increases to continue, ''but at a slower pace.''
When consumers dig into their pockets for these big items, smaller luxury goods like luggage and jewelry get pushed aside. But ''I expect by the time we hit Christmas, there will be a real bulge in the sale of a lot of high-ticket durables not housing related,'' figures Wintzer at Lehman Brothers. ''Christmas is the time after a full year of recovery that you're liable to see all kinds of things happen. It could be so good'' that stores may have trouble meeting inventory demand.
John Rambo, vice-president of Kay Jewelers, doesn't expect any inventory problems for his chain of jewelry stores, but he is looking at ''a very good fourth quarter.''
''We had a tough year, the year before last,'' he says, ''but we are on the plus side this year.'' Heavy advertising, along with a more buoyant consumer, have brought sales up 17 to 18 percent for the year so far.