Voices of consumers: Jobs report shows inclination to spend
Americans finally feel confident enough in the US economy to splurge.
Friday’s jobs report suggested that many of the hefty total of 271,000 positions added in October resulted from consumer spending - and the expectation that solid spending would extend through the holiday shopping season.
People are treating themselves to gourmet hamburgers, expanded wardrobes and new cars. Their spending has offset the global weakness that has hampered the manufacturing sector, jarred the stock market and depressed oil prices.
The economy remains far from fully healed. Yet job growth has generated more confidence and helped power a recovery entering its seventh year.
The government said restaurants and bars employed an additional 42,000 workers last month. Clothing stores added 19,500, auto dealers 5,600.
Roughly half the jobs added came from just three sectors that depend on consumers: Health care; retail; and hospitality and leisure. Overall, the hiring helped push the unemployment rate to a seven-year low of 5 percent. It showed that even the slow rebound from the Great Recession is generating traction after years of subpar growth levels.
In Boston, Michael Leonard is looking to buy a car. “I’ve got a higher salary and lower expenses up here,” said Leonard, of Boston’s Back Bay neighborhood, who started a new accounting job in April after moving from Charleston, South Carolina.
He’s been buying lunches at restaurants twice a week and going out to dinner about once a week, more than he did in Charleston. And he now plans to upgrade to a nicer vehicle than he first intended. “I’d be getting used,” Leonard said. “Now I’m looking at new.” After recently graduating from college, Christianne Kinder found a job managing customer
service in Boston and “more disposable income” faster than she expected.
She doesn’t have a car and spends little on transportation, giving her more to spend on clothes and food. “I spend most of my paycheck on T.J. Maxx,” said Kinder, a self-described “foodie.”
Even as the economy improves, some people are still waiting for their expenses to become more manageable. In cities like Denver and San Francisco, sharply rising housing costs have put the benefits of an improving job market out of reach for many residents.
Chris Harvey, a 32-year-old Denver resident, bemoaned the city’s high rents and said his spending habits haven’t changed. “The rent - it’s going through the roof,” Harvey said , smoking a cigarette outside his apartment building a few blocks from the state capitol.
Harvey said he’s paying $785 for a studio, and to make ends meet, he’s renting part of it to friends who need a place to stay. He doesn’t plan to spend any more than usual during the holiday shopping season.
The low oil prices have minimized inflation. But that’s hurt some who manage on fixed incomes.
In St. Paul, Minnesota, Lynne Navratil, 64, retired after working for the Ramsey County government. The relative absence of inflation means that Social Security recipients like her are receiving no cost-of-living-adjustment, even as her expenses for rent and health care have increased.
“I do love to eat out a lot, but I’m really having to budget closely in order to make it each month,” she said. “It doesn’t feel good.”
Navratil said she’ll be spending less on holiday shopping this year than she usually does “because I can’t afford it.”
The revival of downtowns around the country has helped boost spending on night life and construction. Demand for new buildings helped raise construction wages 1.5 percent over the past month - an 18 percent annualized increase - to an average of $25.40 an hour. That compares with an average 0.4 percent month-over-month increase for all rank-and-file US employees.
New Orleans’ central business district is full of newly constructed loft apartments and hip restaurants popular with millennials who like being able to walk everywhere.
“I’m not the kind of guy who really buys a lot of clothes, but I do eat out a lot,” said Todd Jones, a resident of the neighborhood, whose most recent restaurant outing was to the newly opened Company Burger next to his office.
Jones said he hasn’t particularly changed his purchasing habits in recent months. But has noticed in his accounting work that his clients are faring better - bringing in more business and, in turn, paying their workers more. Belinda Laws, who works at UBS Financial Services in New Orleans, was waiting outside her office Friday to buy lunch at a Thai food truck.
She credited her improved financial situation in recent years to the fact that her children graduated from college and no longer need her support.
Laws plans to take a trip to New York this holiday season to visit her daughter. She’s also noticed that many of her friends and family in recent years have seen their financial situations improve as well.
“It’s better today than it was two or three years ago,” Laws said. — AP