High-end retailers like Nordstrom and Neiman Marcus have reported stronger sales. Cadillac and SRX crossover SUV sales tripled this spring over last. The confidence of small businessmen showed a healthy increase in May, and the retail sale of new boats is on the edge of positive territory.
Is the “luxury buyer” really returning? Many signs are pointing to yes. Some say the buyer may be more practical, still bargain-hunting, less flamboyant and pickier. But he’s definitely back on the radar screen.
Admittedly, a few days ago, retailers reported lukewarm May sales of less than 3 percent overall, but luxury spending was a bright spot. Such sales grew more than three times faster in May than overall, according to a report from MasterCard Advisors Spending-Pulse.
Adding to that news, in its annual survey, American Express and Harrison Group reportedly dubbed this year the first turnaround in three years for retail spending. There is a stipulation, however: The increased spending will be primarily by the wealthiest 10 percent. The remaining 90 percent are expected to spend the same or slightly less than they have been spending since 2007. Still, even if only the top 10 percent loosen up, it’s good for the boat business and a strong indicator we’re rounding third and heading for home.
And there’s good support for this conclusion. While boat sales were down 25 percent from last year in January and February, the rate of decline slowed to 7 percent in March and just 3 percent in April. There’s momentum building. What’s more, traditionally, down cycles in consumer confidence and boat sales average 29 months, while the upturn part of the cycle averages 62 months. What’s not to like about that outlook?
Meanwhile, confidence among small businesses rose in May to the highest level since September 2008, according to Bloomberg Businessweek, reporting on the National Federation of Independent Business’s optimism index. It rose to 92.2 in May from 90.6 in April. The NFIB index measures businessmen’s expectation for the economy looking six months out. Clearly the mood is increasingly upbeat.
“The small-business sector is in maintenance mode, not growth, but it has definitely lifted off the bottom,” NFIB chief economist William Dunkelberg told Bloomberg Radio.
Interestingly, 32 percent of survey respondents cited “poor sales” as their top business concern. Of course, credit conditions are also ranked a major problem, something NMMA president Thom Dammrich attested to Tuesday at a Senate roundtable in Washington on credit for small business or, more precisely, the lack of it.
The NFIB’s optimism index is still lower than levels reached in past economic rebounds, validating this recovery will gain strength slowly. But there’s evidence for our industry that things are moving forward again. Moreover, if the Obama administration and Congress can finally get a grip on providing genuine help — not lip service — in the way of credit for small businesses like ours, we can be even more optimistic about the balance of this year and next.
Still, this overall news gives my attitude a boost!