In January, the Confidence Index was at 97.7, with the Expectations Index peaking at 105.3.
Hastings said while the job market has improved, wage growth has trended down.
“People are getting jobs, but at lower wage levels than in the past. This could lead to a slowdown in consumer spending down the road. So far consumer prices are up on a variety of products. With wages not growing, there won’t be big gains on spending unless there’s massive job creation,” he said.
The economist said the employment picture would have to show at least nine more months of steady job creation, or a moving average of at least 100,000 jobs created, before one can say that the economy’s perceived improvement is on solid footing.
He expects consumer spending to continue, but “moderate in the second half from the hot pace of the last nine months. It will not fall off a cliff, but there are a few things to watch closely, such as housing prices, jobs creation and whether wages are lagging behind inflation.”
Gary Drenick, director at BIGresearch, a consumer market intelligence firm, said that his firm’s surveys at the beginning of the month indicate a possible slowdown in apparel purchases by consumers. Respondents are asked questions ranging from demographics to attitudes about the economy, as well as specifics on shopping strategies and financial planning.
Of the 8,000 to 10,000 surveyed, 46.5 percent said that they planned to use their credit cards less often. Tax refunds, according to 9.6 percent of the respondents, would be used to pay down credit-card debt.
Of course, the plan to decrease overall spending comes at a price for retail sales, with apparel as one category impacted by the pullback.