Department Store Stocks Plummet as Americans' Savings Accounts Dry Up
Major retailers are struggling with the reality that Americans are collectively saving less money than they did in previous years, according to a report.
As a result of inflation and other economic factors plaguing consumers, department stores are feeling the strain heading into the holiday shopping season.
According to a recent report from the Wall Street Journal, some of the county’s largest retailers are seeing losses both in sales and in their market value.
That directly correlates with how much excess money Americans have in their savings accounts following two years of record-high prices for housing and basic goods.
CNBC cautioned earlier this year that the country’s collective savings were dwindling.
Citing information from the U.S. Bureau of Economic Analysis, the outlet reported February’s annual rate of personal savings sat at 4.6 percent — below the average annual rate of over eight percent.
The environment during much of the COVID pandemic actually worked to help people save more cash.
Millions of Americans received stimulus checks and benefited from moratoriums on rent.
Some households were able to save as much as 30 percent of their collective income, CNBC reported. But the economic environment has shifted after more than a year of record inflation.
Student loan payments were also paused during the pandemic, but will resume in the coming months for many, many people.
According to the Journal, a perfect storm of price increases and the coming payments to the Department of Education are hurting America’s retail giants — and department stores in particular.
Macy’s sales have plunged 8.2 percent this summer, compared to the same time last year, while shares tumbled last week by 14 percent.
Kohl’s sales were also down five percent during the same time, while shares were down 10 percent, the Journal reported.
Other companies, such as Nordstrom, Dick’s Sporting Goods and Foot Locker have seen their shares drop in recent months by 10 percent, 24 percent and 33 percent, respectively.
Each retailer has also seen a decline in overall sales compared to 2022.
Jinjoo Lee, writing for the Journal, predicted department stores could be in for a season not unlike that of the Great Recession, thanks to an absence of extra money in people’s bank accounts.
While describing the current state of retail as “an unwelcome flashback” to the economic issues that plagued Americans from 2007 to 2009, Lee commented:
“The spending slowdown is really raining on Macy’s and other department stores’ parades. Unfortunately, this feels more like a worsening storm than a fleeting cloud.”
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