At the same time, consumers who have been spending on big- ticket goods such as automobiles and appliances may be cutting back elsewhere.
At Macy’s Inc., sales fell in the second quarter, the first decline since the fourth quarter of 2009, and purchases also cooled at Wal-Mart Stores Inc., while profit fell at Target Corp.
“We believe that much of our weakness is due to the health of the consumer,” Macy’s chief financial officer Karen M. Hoguet said on an Aug. 14 earnings call. “Consumers seem to be choosing to make purchases in non-department store categories such as cars, housing and home improvement.”
The Fed is gauging the strength of the economy as they debate dialing back record monetary stimulus. Policy makers considering reducing $85 billion in monthly asset purchases were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to taper this year if the expansion strengthens, with a few saying a reduction may be needed soon, minutes of their last meeting showed yesterday.
“Almost all committee members agreed that a change in the purchase program was not yet appropriate,” and a few said “it might soon be time to slow somewhat the pace of purchases as outlined in that plan,” according to the record of the Federal Open Market Committee’s July 30-31 gathering released yesterday in Washington.
“A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases,” the minutes show. “Almost all participants confirmed that they were broadly comfortable” with the committee moderating “the pace of its securities purchases later this year.”