• by Thom Forbes  @tforbes, May 14, 2014

With the stock markets continually flirting with all-time highs lately, you’d think that we’d all be crooning “Happy Days Are Here Again” and spending like crazy, no? But indications are that consumers  — even as their “confidence” hovers at levels not seen since the Recession of ’08 hit home — remain wary. And although they’ve been taking on more debt, mostly in mortgages, they have been tightfisted in other areas.

A Reuters piece this morning, in fact, tells us that shoppers have become so frugal that food companies are having a tough time raising prices. “According to Deloitte's annual survey of food shoppers released last week, 94% agreed they would remain cautious and keep spending at the same level even if the economy improves,” write Lewis Krauskopf and Lisa Baertlein. “That's about the same percentage as it was in 2010 in the aftermath of the credit crisis.”

Pat Conroy, leader of the U.S. consumer products practice at Deloitte LLP, tells the reporters that “consumers have gotten really good over these last four years at stretching a penny. Our hypothesis was that this thing was going to leave a scar, not a bruise. So far, we've been right.”

Milk (and Danone yogurt) sales have fallen as prices rise, Whole Foods growth has cooled as competitors have sprouted, and Dean Foods CEO Gregg Tanner told analysts “there are certain price thresholds that we can't cross, or it starts to impact the demand,” in a conference call last week, Krauskopf and Baertlein report. 

Indeed, “Consumers Hold Tight To Wallets in April” is the headline atop one AP story about seasonally adjust retail sales, with the Commerce Department reporting yesterday that they “rose just 0.1% last month, after surging 1.5% in March following a harsh winter that had curtailed shopping.”
While several economists point out that a late Easter may have contributed to the dip, “the modest sales suggest that consumers may remain cautious during the still-slow economic recovery. Higher sales would help drive faster growth because consumers account for about 70% of the economy,” according to the story.

An increase in hiring is more important to Main Street than soaring stock prices, however, and there’s good news on that front with employers adding “a robust 288,000 jobs in April, the most in two years,” as another AP story put it. It was the third month with a gain of more than 200,000 jobs, as Christopher S. Rugaber reports.

“At the end of the day, it is all about one's job, and job security,” BMO Capital Markets senior economist Jennifer Lee writes in a research note cited by the AP. “A job is a job and that will help determine the ability for one to consume. And the U.S. labor market is improving steadily, which will support consumer spending.”

The split personality of the recovery is reflected in consumer confidence figures released by the Behavior Research Center of Arizona yesterday. “Driven by big gains in its urban areas, Arizona's consumer confidence has hit its highest level in six years” — at 75.1 — the Arizona Republic’s Ronald J. Hansen reports. At the same time, “consumer confidence actually fell from 65.5 to 49.7” in rural areas. “Respondents there cited a weak labor market as the reason for their worsening outlook,” writes Hansen.

Meanwhile, “outstanding household debt rose by $129 billion from the previous quarter, boosted by a $116 billion jump in mortgage debt and smaller rises in student and auto loans,” according to a survey by the Federal Reserve Bank of New York released yesterday and reported by Reuters on NBCNews.com. “Total household indebtedness was $11.65 trillion, which is still 8.1% below the peak in the third quarter of 2008.”

“We've observed household debt increase three quarters in a row and delinquency rates at their lowest levels since 2008,” says New York Fed economist Andy Haughwout. “However, the direction of future mortgage originations will have an important implication on the household financial outlook and we will continue to monitor it.”

For all the record setting on Wall Street — yesterday saw new benchmarks established for both the Dow Jones Industrial Average and Standard & Poor's 500 — “the mood” is akin to that on Main Street: “calm but hardly euphoric,” reports the Christian Science Monitor’s Mark Trumbull. “Trading professionals are buzzing about whether the market is overvalued and when the five-year rally might end. Many small investors still feel the shock of the financial crisis as a not-so-distant memory.”

So do shoppers. And clutching the purse strings seems to be their version of Linus’ comforting security blanket.