Department store stocks plummet as US savings accounts dwindle.
Major Retailers Struggle as Americans’ Savings Accounts Dry Up
According to a report, major retailers are facing a challenging reality as Americans collectively save less money than in previous years. This is causing department stores to feel the strain, especially as the holiday shopping season approaches.
The Wall Street Journal recently published a report revealing that some of the country’s largest retailers are experiencing losses in both sales and market value. This decline can be directly attributed to the reduced amount of excess money Americans have in their savings accounts, following two years of high prices for housing and basic goods.
Earlier this year, CNBC warned that the country’s collective savings were dwindling. The U.S. Bureau of Economic Analysis reported that the annual rate of personal savings in February was only 4.6 percent, well below the average annual rate of over eight percent.
During the COVID pandemic, many Americans were able to save more money due to stimulus checks and rent moratoriums. Some households even managed to save up to 30 percent of their income. However, the economic landscape has shifted with record inflation over the past year.
Additionally, the pause on student loan payments during the pandemic will soon come to an end for many individuals. This, combined with rising prices, is creating a perfect storm that is negatively impacting America’s retail giants, particularly department stores.
Macy’s has seen an 8.2 percent decline in sales this summer compared to the same period last year, and their shares have tumbled by 14 percent. Kohl’s sales were down five percent, and their shares dropped by 10 percent. Other companies like Nordstrom, Dick’s Sporting Goods, and Foot Locker have also experienced significant decreases in their share prices.
Each retailer has witnessed a decline in overall sales compared to the previous year. Jinjoo Lee, writing for the Journal, predicts that department stores may face a season similar to the Great Recession, as people’s bank accounts lack the extra money needed for discretionary spending.
“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.”
It is clear that the drying up of Americans’ savings accounts is having a profound impact on the retail industry. As the holiday season approaches, major retailers will need to find innovative ways to entice consumers and navigate these challenging economic conditions.
Read more: Department Store Stocks Plummet as Americans’ Savings Accounts Dry Up
Source: The Western Journal
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