Consumer Spending Stabilized The Economy In Second Quarter.

Consumer spending, largely at mass retail outlets, kept the economy from slipping into decline during the second quarter of 2001.

The growth of the economy, as measured by real gross domestic product (GDP), registered just 0.2 percent during the second quarter of 2001, compared with 1.3 percent for the first quarter. Consumer spending and residential investment were the major contributors to the increase in real GDP in the second quarter. Pulling these positive factors down were decreases in company spending on equipment and software, export earnings and nonresidential construction.

Much of the growth in consumer spending at retail outlets took place at discount department stores and warehouse club/superstores, according to the September 2001 Economic Trends Report of the International Mass Retail Association. These mass retailers continue to take market share from conventional and national chain department stores.

“We are not surprised that consumer spending has rescued this stagnating economy,” said IMRA President Robert J. Verdisco. ““The collective strength of the American consumer is truly awesome. Mass retailers are right on the mark for those consumers who must stretch their dollars by finding the best value. Mass retail stores are the right place to shop in this economy, because they offer excellent value, quality, convenience and selection.”

Consumer prices — largely energy and food prices — have also contributed to a tightening of consumer budgets during the period. This explains the proclivity of consumers to spend their hard-earned dollars at mass retail outlets, according to IMRA’s report.

Home sales continued to grow during the second quarter of 2001. This increase was owed in part to lower mortgage rates. It is also likely that the sideways movement of the stock market is encouraging consumers to invest in housing rather than stocks. Continued strong spending on homes bodes well for garden and home supply retailers.

For more information at http://www.imra.org.

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