The first half of December is normally the time when shoppers take a breather before the final holiday push, but there's no sign of any let-up in my neighborhood. Nor is there any hint that concern about the fiscal cliff has consumers pulling back on purchases (though that kind of cause-and-effect would be hard to detect). Passing observations aside, holiday sales totals won't really be known until January. From this week's Business Update on KPCC:
Steve Julian: Is that a California thing, you think?
Lacter: Well, matter of fact, California happens to be outpacing the nation when it comes to retail sales. The numbers have been up for 12 straight quarters, and by the end of this year spending is expected to be back at the same level as it was right before the recession. All told, taxable sales in California are up 25 percent since the second quarter of 2009, when the state economy had pretty much hit rock bottom.
Julian: In what sector?
Lacter: A good portion of the increase comes from auto sales, but the numbers are up in most all categories: department stores, restaurants, hotels. And, we know that when consumers are spending it makes businesses more willing to hire, and it opens up other areas of the economy.
Julian: Why do you think we're spending more?
Lacter: Well, it's possible that the housing market might be playing a role. Home prices have been edging higher all year, and that increases the value of properties - and that makes it easier to refinance (also remember that interest rates are near record lows). When homes are being sold in your neighborhood at much higher prices than you would have expected, say, 12 months ago, it makes you feel better about your own financial situation - and about spending money. That's known as the wealth effect. It also happens if the stocks you own have gone up recently.