The Consumer Confidence Index, which had also fallen a bit in January, dropped to 75, from 87.3 last month, its lowest level since November 1993, when it hit 71.9. (One exception, the Conference Board says, is the beginning of the Iraq War in 2003.)
To a degree, boatloads of media headlines predicting recession are a factor in how consumers feel, says Lynn Franco, director of The Conference Board Consumer Research Center. "Certainly," she says, "negative news tends to impact consumers' expectations." But the steady downtrend in the index, she says, "is more than just the impact of news."
When confidence falls, "the first thing that goes is discretionary spending--and that can mean dining out, going to the movies, and it can also mean shopping. Plus, retailers also have more competition for that spending, in the form of higher prices at the pump and for food."
At Home Depot, for example, fourth-quarter sales dropped 4.7%, compared to the fourth quarter of 2006. And comparable-store sales, a measure closely watched by retail observers, sank 8.3%. Net earnings fell 28%.
And like Lowe's, which announced similar results earlier this week, Home Depot's predictions for the year ahead are harsh--a total sales decline of 4 to 5%, with negative comparable-store sales in the "mid- to high single-digit range."
At Macy's, fourth-quarter sales rang in at $8.6 billion, a fall of 6.2%. On a same-store basis, sales slipped 2%. For the full year, total sales are $26.3 billion--a dip of 2.4% from the prior fiscal year--while same-store sales were down 1.3% for the year.
Even stronger retail performers are struggling a bit. Target says its sales gained for the quarter, up 0.4% to $19.3 billion--but net earnings fell 8.2% as the economy slowed in the second half of the year. For the fourth quarter, comparable-store sales gained 0.2%, compared to 4.8% in the prior year. And for the full fiscal year, comparable-store sales gained 3%, compared with 4.8% in the previous fiscal years.
And at Nordstrom, an upscale retailer that has been doing quite well, total sales in the fourth quarter fell to $2.5 billion--a decrease of 4.4%--while same-store sales fell 0.7%. And for the year ahead, it is predicting not gains, but decreases: It says it expects comparable-store sales in the year ahead to come in "flat to down 2%."