• by Thom Forbes , August 16, 2013

Consumers are a fickle bunch, seemingly exuberant one month; down in the dumps the next. Prognosticators with their finger to their spirits are telling us that the mood among the mass-market shopping class is bleak. And so, retailers such as Wal-Mart and Kohl’s are lowering their projections, as Sarah Mahoney reports this morning, and analysts and journalists are carrying the message to their flocks even as the few workers who aren’t afraid to take a vacation put their worries behind and set out to enjoy the last few weeks of summer.

“Big retailers are casting a pall over what had been a healthy outlook for consumer spending,” writes the Wall Street Journal’s Shelly Banjo in her lede.

“A lot of Americans are still spending their money only on socks and other essentials, highlighting the disparity between younger and poorer consumers and those who are benefiting from the economic recovery,” observes the New York Times’ Stephanie Clifford in hers.

The Consumer Confidence Index, which had improved in June, pulled back slightly in July to 80.3 (1985=100), down from 82.1 in June while The Expectations Index decreased to 84.7 from 91.1, the Conference Board reported at the end of last month.

Lynn Franco, the organization’s director of economic indicators, blames “a weakening in consumers’ economic and job expectations” while reminding us “confidence remains well above the levels of a year ago.”

“There is a certain segment of the population that is faring well in this economy and have seen their net worth rise sharply with stock and housing market gains,” Retail Metrics president Ken Perkins tells the Times’ Clifford. “Then there is the much larger segment of Americans that are working in low-wage jobs, part-time jobs, that are struggling to make ends meet and are living paycheck to paycheck. They are not spending beyond necessities.”

Even those with a bit of cash in their accounts are being tight-fisted about it. “Analyst Liz Dunn of Macquarie Capital lowered her estimates for Abercrombie & Fitch quarterly sales, which will be announced later this month,” Tiffany Hsu reports in the Los Angeles Times. “In a report titled ‘We Hate These Blurred Lines’ after the popular Robin Thicke tune, Dunn said business is suffering from an absence of clear fashion trends and is instead relying on the effect of promotions.” 

"Everyone wants to talk about recovery -- it's like the unrecovery," Susquehanna Financial Group analyst Bob Summers tells Reuters’ Phil Wahba and Lisa Baertlein after seeing the Wal-Mart results in particular. "The demographic that they cater to, not only has it not seen improvement, I would argue that things have gotten worse.” 

In general, retailers are citing “the stress that consumers are feeling because of higher payroll taxes, expensive gasoline and a slow job market four years after the U.S. economy started to rebound,” report Wahba and Baertlein.

Writing in the Financial Times, Tim Harford points out “the income share of the top 1% has roughly doubled in the U.S. since the early 1970s, and is now about 20%.” 

That may be good news for the highest of high-end marketers and retailers but it’s not a welcome stat for those catering to the 99%. And the divide operates like the compounding interest in a bank account that too few see any more.

“The more unequal a society becomes, the greater the incentive for the rich to pull up the ladder behind them,” opines Harford.

For those with enough discretionary income in their pockets to play the market, or with a 401K that’s still intact after the Great Job Loss, there’s different bad news arising. After last week’s first drop since June, stocks “thudded lower for a second day yesterday,” as Marketwatch’s Kate Gibson puts it, with Cisco’s bleak outlook and “poor performance by retailers … a concern heading into a seasonally important part of the year.” The Dow dropped 1.5% yesterday.

The gloomsayers have been holding court. 

The Financial Times’ Tracy Alloway and Arash Massoudi take a look at one of those arcane technical indexes of Wall Street performance called “The Hindenburg Omen” (the more arcane the theory may be to the Average Joe and Joan, the more colorful the name right? The article also points to “Death Cross” and the “Bearish Abandoned Baby.”) The Hinderburg has come around 11 times during the past 50 days, which “may” portend a sell-off, according to another analyst. Or it may not.

Then there’s Adam Grimes, chief investment officer at Waverly Advisors, who says: “It’s just a technical signal that is far better for sound bites and articles than it is for investment purposes.” 

Keep those sound bites coming.