Retail Sales.

Retail sales reported today for the month of April disappointed.  Bloomberg.com covers it and you can read all about it here.  Economists have been puzzled about consumer behavior since the collapse in the price of oil last year.  Many expected the savings at the pump to translate to better retail sales.  After all consumer spending is something like 70% of the US economy.  That hasn't materialized in the expected way.  Bloomberg from the same report linked above notes that, "consumers have been using the windfall from cheap gasoline to boost savings as wages have been slow to pick up, which may temper the projected rebound in U.S. growth this quarter".  

First, let's acknowledge that the drop in gasoline prices has been substantial.  I saved over $40.00 driving to and from Indianapolis last weekend for my daughter's graduation.  I do think there's something to the fact that some of that savings is going to pay down debt and build up savings.  Mentally, there are many Americans who are as scarred from the last recession as my grandparents were from the Great Depression.  That generation never could quite shake the fear that whatever they had could be taken from them without much warning.  Hence they were frugal with money and didn't trust institutions like banks or the stock market.  Many of what is called the "Millennial" generation seem to exhibit those traits as the period between 9.11.01 and the last recession represents for many the formative years of their lives.  But I don't think that quite tells the whole story.  Here's a brief list of why  I think the party line may be wrong.  

Folks shop differently today.  They shop online at outlet sites or they buy 2nd hand.   

They spend money differently.  Retail sales have been punk but restaurants are seeing strong sales growth.

People may not be spending just to spend.  Instead of owning four or five pair of designer blue jeans, one or two {perhaps bought on line or on sale} may be all a person needs.  

The rise of 2nd hand sits like Etsy.com and discount superstores like Costco.

Access to information about products and where to buy them cheap from the internet.

Also I think the Millennial's are going to be a force for change and shake things up in a way we haven't seen since the "Baby-boomers" started their long march through America's demographic profile.  I may be biased with three children from that generation but it is a theme I'm going to revisit a lot going forward.

*Costco and perhaps Etsy.com are components of various ETFs owned in client and personal accounts.