Consumer Spending: Building Momentum in Fits and Starts

Transcription

1 Consumer Spending: Building Momentum in Fits and Starts Michael P. Niemira Vice President, Chief Economist & Director of Research International Council of Shopping Centers 1221 Avenue of the Americas, 41st Floor New York, New York A Presentation for Council of State Governments-West 66 th Annual Meeting, Las Vegas, Nevada August 1, 213

2 International Council of Shopping Centers Founded in 1957, the International Council of Shopping Centers (ICSC) is the global trade association of the shopping-center industry. With over 6, members in the U.S., Canada and more than 8 other countries, its members include shopping-center owners, developers, managers, marketing specialists, investors, lenders, retailers and other professionals as well as academics and public officials. As the global industry trade association, ICSC links with more than 25 national and regional shopping center councils throughout the world.

3 Highlights The Importance of the West A Look at the Industry Key Trends Affecting Industry and Consumer Spending Shopping-Center Space Stagnant The Diderot Effect More Positive Fundamentals Back-to-School Season A New Business Cycle Dynamic Outlook: Building Momentum

4 - 1 - A Look at the Shopping-Center Industry in the West

5 Importance of the Shopping-Center Industry to the U.S. Economy and the West The shopping-center industry directly accounts for 9.2% of the employed workforce for the U.S. and in the West. That is approximately 12.4 million jobs nationwide and 2.7 million of those jobs are in the West (about 22% of the national figure). The U.S. shopping-center industry s direct and indirect impacts account for 12.7% of all-sector employment. There are approximately 113,3 shopping centers in the United States. About 78, centers are small convenience centers. In the West, there are 27,4 shopping centers-about 24% of the national total. -2-

6 Importance of the Shopping-Center Industry to the U.S. Economy and the West Shopping-center-generated sales were $2.42 trillion in 212 and the West accounted for $566 billion of that or 23% of the total. The industry s commerce directly generates $136 billion in state sales tax revenue and $35 billion in the West. The industry also directly pays $22 billion in property taxes and about $5 of that is generated in the West

7 - 4 - Regular updates available in ICSC s edata

8 - 5 - Key Trends Affecting the Industry and Consumer Spending

9 Less Development of Retail Space as Online Demand Grows

10 Percentage Change from Prior Year 3.2 Growth in Shopping-Center Space West United States Little New Space Being Developed throughout the United States or in the West Shopping-Center Gross Leasable Area in the West Shows Steady Share of the National Tally in Recent Years Share of Total U.S. Shopping-Center Space Shopping-Center Space in the West

11 Stronger Home Demand Means More Household Spending

12 % Change from Prior Year (12/12) Ratio Ratio % Change from Prior Year (12/12) The Improving Housing Markets But Mortgage Rates Backup Average Home Price (New and Existing) as Ratio to Disposable Personal Income Per Capita Housing affordability may be weaker, but is still very strong relative to per capita disposable income Home Prices Divided by Per Capita Disposable Income Average Home Demand as a Trigger for the Diderot Effect Nine-Month Lead Time Home demand new and existing is supportive of healthy household-related consumer spending Home Demand (Left Scale) Retail Sales (Right Scale)

13 % Change from Prior Year % Change from Prior Year Rising Home Prices Continue To Lift the Wealth Effect 15 Average Housing Prices Total Home Prices: Sales-Weighted Average of New and Existing Prices OFHEO Home Price Index (Quarterly) - 1 -

14 Improving Consumer Confidence and Other Fundamental Indicators Driving Retail Spending

15 More Diffusion of Positive Momentum Across the Country, But Nevada Still Weak State Coincident Indexes of Business Activity More and Deeper Green, the Stronger the Activity

16 % Change from Prior Year % Change from Prior Year 6 Employment in the West is Growing More Rapidly Than the Nation Employment Growth Western States Employment U.S. Employment

17 Composite Series: Index Numbers, 1985=1 16 Consumer Confidence is Improving, But More So in the West Consumer Confidence Indexes Mountain States CCI Pacific States CCI U.S. CCI Source: Conference Board

18 Year-over-Year Change Year-over-Year Change Stock Market Continues to Show Gains But Subject to Fed Policy 6 Consumer Confidence: Households With Income $5 K and Over vs. Stock Prices Confidence Index (Left Scale) Dow Jones Index (Right Scale) Source: Conference Board; ICSC Research The stock market wealth effect is helping to lift high-income household confidence and spending. And may suggest another upturn in high-income confidence versus last year.

19 Rolling Standard Deviation [Inverted Scale] Quarterly Real Chain-Store Sales Growth (Right Scale) Price Swings Affect Consumer Willingness to Spend -. The Katona Effect Reigns Price Level Volatility and Spending Slightly more upbeat Price Level Volatility [Inverted] on Left Scale Real Consumer Spending Growth on Right Scale

20 Near-term Outlook: Back-to-School Season Underway and Likely to Post Moderate Gain

21 ICSC-Goldman Sachs BTS Survey As of July 14 th, 29% of Households Already Started Their BTS Shopping. The percentage of consumers that already shopping at the same time in the season is lower than in 212 (33%), but higher than in all other years since 24. More Tepid Pace of BTS Spending in 213. More Spending Concentrated in August. Shift in Composition of BTS Spending Towards Apparel vs. Electronics/Phones. More Online Spending Than Last Year. Discounters Expected to be Big Winner for BTS. High-income Households Plan to Spend 35% More than Average Slower Start, More Concentrated, More Tepid, More Apparel and More Discounter Driven

22 State Tax Holidays Catalyst for Timing Comparable in 213 With Exception of Texas Alabama (August 3-5); Arkansas (August 4-5); Connecticut (August 19-25); Florida (August 3-5); Georgia (August 1-11); Iowa (August 3-4); Louisiana (August 3-4); Maryland (August 12-18); Mississippi (July 27-28); Missouri (August 3-5); New Mexico (August 3-5); North Carolina (August 3-5); Oklahoma (August 3-5); South Carolina (August 3-5); Tennessee (August 3-5); Texas (August 17-19); Virginia (August 3-5) Alabama (August 2-4); Arkansas (August 3-4); Connecticut (August 18-24); Florida (August 2-4); Georgia (August 9-1) Iowa (August 2-3); Louisiana (August 2-3); Maryland (August 11-17); Mississippi (July 26-27); Missouri (August 2-4); New Mexico (August 2-4); North Carolina (August 2-4); Oklahoma (August 2-4); South Carolina (August 2-4); Tennessee (August 2-4); Texas (August 9-11); Virginia (August 2-4)

23 U.S. Back-to-School Spending July-August-September, % Change from Prior Year B o o k S h o e T o ta l S a lep se rc e net le c tro n ic sp e rc e nfa t m ily Clo th inpg e rc e n t S a le sp e rc e n S a le s P e rc e n t Year (b n. $ ) Ch a n gs ea le s (b n. $ Ch ) a n g es a le s (b n. $ ) Ch a n g e(b n. $ ) Ch a n g e(b n. $ ) Ch a n g e 1995 $ $ $ $ $ est Q1 Share RISK: Survey suggest that maybe electronics spending could be weaker than this forecast. BTS as measured by these U.S. Census data are expected to increase 3.1% in 213. Survey data might suggest weaker electronics, but stronger shoes.

24 A New Business Cycle Dynamic?

25 % Change from Prior Year % Change from Prior Year % Change from Prior Year % Change from Prior Year Real Consumer Goods Spending The New Element of Consumer Spending TREND Nice Recovery in Goods Spending Goods Spending Trend Pace 3 Real Consumer Services Spending TREND 1-1 Historically Weak Recovery in Services Spending Services Spending Trend Pace

26 6. A Longer-Term Retail Sales Perspective: Building Momentum

27 Percentage Change U.S. Shopping Center Sales Trends Percentage Change from Prior Year, Forecasts 8 Forecast Average Annual Pace = 4.9% Average Annual Pace = 2.1% 3.5% Average Annual Pace

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