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Is the glass now better than half full?

Like you, Iím always looking for signs that the recovery is really happening, that itís not fizzling out, and we can anticipate improving boat sales. Thatís why this weekís Commerce Department report on consumer spending has me seeing the glass better than half full, and it merits comment.

According to the announcement, confidence is growing that the recovery will continue even if we may feel like recovery is being pulled up against its will. In February, consumers increased their spending by 0.3 percent. Itís the fifth consecutive monthly rise. Thatís positive news and should be reason for some added enthusiasm in our sales departments.

That said, I canít help but recall the glass is also part empty. Looking at that, I see the report indicated the pickup in spending was actually down from the higher 0.4 percent in January. Moreover, it was the smallest increase since last September. That may raise concern for some people. Is it a sign the recovery is losing color? I donít think so.

What we must recall are the circumstances of that time. I refer to the fact that the country, particularly the eastern half, was being blasted in February by near record bad weather ó lots of it! As I see it, that alone would explain the drop of 0.1 percent.

As evidence, I own a building in Brooklyn, N.Y., that I rent to Ebeeís clothing store. I called my tenant and asked about his February sales.

ďIt was horrible,Ē he lamented. ďThere was so much ice and snow and wind chill even I didnít want to come out. Our February was off almost 25 percent.Ē

With that perspective, a drop of 0.1 percent in Februaryís consumer spending is hardly a basis to see the glass half empty.

I found some other good news buried in the Commerce Department report. Savings rates dropped. Consumers put away 3.1 percent of their disposable income. Thatís down from 3.4 percent in January and well off the highest rate of 5.7 percent recorded in April 2009 when consumers were really hunkered down. Februaryís rate is the lowest in 16 months. I see it as a good indication consumers are moving toward more spending, just as cultural anthropologist Dr. Grant McCracken has predicted.

McCrackenís research concluded that we Americans spend and donít save because itís cultural. We were born into the richest, most successful society in world history. We simply canít see ourselves as having less, and we spend to fashion a life as we imagine it to be ó the good life. His conclusions were published recently by the Harvard Press in ďWhy American Consumers Will Spend Lavishly Again

As we head into our prime April-to-June spring selling season, the news is positive. Iím not suggesting for a minute that our waters wonít continue to be choppy this year. They will. But there is sufficient evidence to be certain this spring selling season is framed by a significantly better economic climate the dismal time of a year ago.

That message alone should help our whole dealership team view this spring as the best opportunity in some time to do better.

Comments

2 comments on “Is the glass now better than half full?

  1. Capt. Chris

    Norm,
    I understand your rationale for celebrating the decline in the savings rate from 5.7% to 3.1%, but a savings rate of 5.7% is not a bad thing for our country long term. It is precisely the lack of savings and the accumulation of massive amounts of debt that have contributed and exacerbated our current economic malaise. For the consumer to “spend like a drunken sailor” is unsustainable and a flawed economic model. Old sayings become old sayings because they are, for the most part, accurate and have stood the test of time. Let’s not forget two of them being “Save for a rainy day and sooner or later you have to pay the piper.” Remember that Net Worth is defined by how much one OWNS not how much one OWES.

  2. Captain Andrew

    I have to agree with Captain Chris on this one. While I understand the need for dealers to sell boats, which can only happen with disposable income, I think the country would be much better off if it saved rather than spent. I think the country has to re-define disposable income. In my opinion disposable income should exclude any and all monies one needs to save for retirement, and if one has children, money needed to be saved for a college education.

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