Bob Gilbert spent US$150 on Sunday on shoes, a Thrashers hockey jersey and a Braves baseball cap at Atlanta's Lenox Square Mall. He said he's also planning to buy a Mercedes Benz convertible in the next two months.
Gilbert's attitude is just what the economy needs after the US suffered its worst terrorist attack, say government officials and private analysts. The violent events of Sept. 11 have changed his views without eroding his self-confidence, essential to keeping the US economy away from recession.
"There's no doubt it's affecting the economy, but it's not affecting me," said the 57-year-old salesman, standing in front of a store window where an American flag was draped.
PHOTO: BLOOMBERG NEWS
Optimism was shaky before Sept. 11, the result of declining stock prices and a 4.9 percent unemployment rate in August that was the highest in four years. When confidence slips, so typically does spending, which accounts for two-thirds of gross domestic product. What consumers do is even more critical now, since 22 analysts in a Bloomberg News survey expect the economy started to contract in the quarter ending this month.
The Conference Board's consumer confidence index plunged to 97.6 this month, the lowest since January 1996, from 114 in August. The survey was conducted by mail before and after Sept.
11, and indicated increased pessimism about the job market.
While the deadly attacks on the World Trade Center towers and Pentagon may have tipped the economy into recession by initially choking off air transportation, closing stock markets and keeping stunned consumers out of stores, many pollsters and economists expect consumers to lead a rebound
`Rally effect'
"This is a big emotional hit on America," said Britt Beemer, a retail consultant and chairman of America's Research Group, which tracks shopper behavior. "But gradually, we'll get back to normal." Sales in major US cities probably fell in the past weekend, although less than in the first weekend after the attacks, Beemer said.
A so-called "rally effect" may kick in, analysts say. If previous crises are any gauge, "the expected plunge in consumer confidence may not materialize," said Jim Bianco, president of Bianco Research LLC in Barrington, Illinois.
Confidence levels have historically tracked with presidential popularity figures during times of national crises, he said, and President George W. Bush's numbers jumped an unprecedented 37 percentage points last week. A Bloomberg poll, released Tuesday, gives Bush an 83 percent approval rating, up from 55 percent last month.
Wartime footing
Shopper Don Flesch, a retired air force sergeant, is ready for a bump from a wartime footing. "This will help us out in the long run if the military gets involved," the Columbia, South Carolina, native said as he pushed his granddaughter's baby stroller, piled high with shopping bags, in the Atlanta mall.
Even so, he's spending less than before.
Stock-market losses and concerns about air safety caused Flesch and his wife to cancel a yearly trip to Greece to visit her relatives. The market lost US$1.38 trillion in value last week.
Recent polls do, in fact, suggest resiliency among consumers.
The survey, conducted from Sept. 18 to Sept. 23, showed consumer optimism at its highest since January. Bush addressed the nation and Congress on Sept. 20.
"I'm spending just as much as I did two weeks ago," said Lila Stangeland, 34, mother of two in South Brunswick, New Jersey.
She and her husband, Glen Marchese, 35, recently bought a house, and they plan to spend about US$12,000 to US$15,000 on furnishings and landscaping during the next few months.
"So far we are still confident that we'll get a paycheck and spend like we do." Stangeland gave another reason for carrying on after the attacks. "Stopping our lives is just going to hurt the economy," she said.
Seventy percent of respondents to a Simmons Market Research Bureau survey said they wouldn't delay big-ticket purchases such as automobiles or major appliances. A Conference Board survey last week showed almost 90 percent of respondents weren't planning to delay major purchases.
Big-ticket purchases
Some analysts say such results should be viewed cautiously.
"It's all predicated on nothing else happening to us as a nation," said Holly Guthrie, retail analyst at Janney Montgomery Scott in Philadelphia. "Americans want some kind of normalcy, but if there are other events that occur there's going to be more and more people who will retrench and won't come out of their shells as quickly."
Damage can already be measured. In the weekend after the attacks, major cities across the US posted large declines in retail sales, according to research by Beemer's group. Sales fell 40 percent in Los Angeles, Atlanta and Philadelphia, more than half in Washington, and more than 55 percent in New York.
Citing the attacks, the National Retail Federation last week reduced its growth outlook for sales in the fourth quarter to 2.2 percent from 4 percent.
Parfums de France, in Tysons Corner Mall in McLean, Virginia, outside Washington, has seen sales decline by a third from its US$2,200-a-day average in early September.
Manager Sheva Javid says she is waiting as "time washes away the depression from people."
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