American consumers say they'll drown sorrows at appliance stores
Bloomberg News
American consumers say they know how to cure what ails them -- a new television for Christmas.
A gauge of consumers' willingness to buy appliances jumped in November to its highest level since at least 2010, Conference Board data showed today. Purchase intentions for TVs were at a two-year high and more respondents planned to buy ranges.
A pickup in purchases of household goods -- which belied the biggest drop in confidence in a year -- would be a boon for retailers such as Best Buy Co. that plan to rely on discounting to lure customers. Stronger job gains and a drop in gasoline prices are giving consumers the wherewithal to spend.
"It's getting better, and when it gets better, good things happen," said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York. "There's probably a little too much caution going into the holiday-shopping season for some retailers."
The Conference Board's gauge of consumer confidence unexpectedly declined in November to a five-month low of 88.7 from 94.1 in October that was the strongest since 2007, the New York-based research group reported today. Its gauge has averaged 65.8 since the expansion started in June 2009.
Today's report is at odds with other readings on sentiment. The Thomson Reuters/University of Michigan preliminary November gauge reached a seven-year high, while the weekly Bloomberg Consumer Comfort Index rose last week to the highest level since January 2008.
Americans may also be getting around to replacing goods that are starting to wear out. The average age of consumer durable goods -- long-lasting items that include furniture and computers -- was 4.6 years in 2013, matching the two prior years as the oldest since 1962, according to Bureau of Economic Analysis data.
Household purchases, which account for about 70 percent of the economy, grew at a 2.2 percent annualized rate in the third quarter compared with the previously estimated 1.8 percent, Commerce Department figures showed today. The improvement was spread across durable and non-durable goods, including recreational vehicles and restaurant meals.
Richfield, Minnesota-based Best Buy, the world's largest electronics chain, posted a surprise sales gain last quarter that included more demand for high-definition televisions.
Even after its biggest increase in same-store sales in more than four years, Best Buy said revenue this quarter will be little changed. Chief Financial Officer Sharon McCollam cited hurdles including heavy discounting this holiday season.
"The promotional environment is very intense," Chief Executive Officer Hubert Joly said on a Nov. 20 conference call, adding that it was more competitive than last year.
The Conference Board's buying plans indexes can't be compared with readings prior to November 2010, when a change in data providers resulted in a break in the series.