Consumers pull back after holiday splurge


Retail sales over the holidays closed out a very difficult 2009 on a somewhat positive note, as American consumers decided to open their wallets and enjoy the season. But now that it’s over, the wallets have been returned to their closed position, according to Consumer Reports.

The Past 30-Day Index for February, measuring activity in the month prior, dropped to 10.9 after posting a 14.1 rating in January (measuring holiday activity).

Planned consumer spending also took a hit – it stood at 8.9 a month ago, and has dropped to 6.9, a score CR says is the lowest posted since last August.

Retail categories getting hit the hardest are personal electronics, major home electronics and major appliances.

On the plus side, CR says its Trouble Tracker index had a beneficial decline, dropping from 58.2 to 53.4. It had a high water mark of 68.7 last September. Difficulty handling medical bills and medicine purchases is a leading cause of consumer grief.

“The holiday season showed glimmers of hope for the economy, but it is clear through the retail index that consumers are now cutting back on spending,” said Ed Farrell, director at the Consumer Reports National Research Center. “While the economy is improving gradually for consumers as witnessed by improvements in the Trouble Tracker, which points to a decline in financial difficulties, the level of job creation needed to fuel a consumer recovery has not developed, though the tide of job losses has been stemmed.”