By Phil Wahba
NEW YORK, Jan 10 (Reuters) - U.S. shoppers are set to spend more in 2010 as purchasing power increases and wealth rebounds but a big shopping spree in the next few years is not in the cards, according to a study released on Sunday by consultant Deloitte Touche Tohmatsu, and STORES Media.
Instead, U.S. consumers will stay focused on saving money to rebuild the trillions in wealth lost as a result of the worst recession in the past two years since the Great Depression.
Despite what Deloitte called a 'sharp' rebound in fundamentals such as hourly wages and pent up demand, those events may have permanently made consumers more cautious.
'They're in a position to spend,' said Ira Kalish, the director of consumer business for Deloitte Research in the United States, at a National Retail Federation conference.
'Whether they will or will not depends on their level of confidence,' Kalish said, warning that U.S. consumer behavior would be particularly hard to forecast.
He predicted shoppers would put off spending on big ticket items and remain value-oriented for the foreseeable future.
Kalish said consumer spending, which now makes up about 62 percent of the U.S. economy, will grow more slowly in the United States and Britain and other consumption-led economies for several years as households pay down debt.
But consumer spending in countries such as China and other countries with large trade surpluses are set to grow more quickly.
REBUILDING WEALTH
In the long term, the rebound in U.S. consumer spending will be constrained by what Kalish expects will be higher taxation levels, a still sluggish housing market and a weaker U.S. dollar that would make imports more expensive.
'In the next five to 10 years, it is going to be a rough environment for U.S. retailers,' he said.
Despite a stock market that has begun to rebound and housing values that have stabilized, U.S. shoppers will keep finding it hard to borrow against their homes or stock portfolios as banks remain ham-fisted in their lending.
Elsewhere, shoppers in the Eurozone, contending with rising unemployment, will get some relief from generous unemployment benefits, while British shoppers will still be hamstrung by lower home values against which to borrow money, Deloitte found.
The slight uptick in expected consumer spending will come on the heels of a drop in margins among the world's 250 largest retailers in the fiscal year ended last June, when profitability fell to 2.4 percent from 3.7 percent the year earlier, according to the study.
Sales during that period rose 5.5 percent at those retailers, which include U.S. chains such as Wal-Mart Stores Inc, supermarket chain Kroger Co and warehouse operator Costco Wholesale Corp, as well as French grocer Carrefour and German retailer Metro .
(Reporting by Phil Wahba; Editing by Diane Craft) Keywords: DELOITTE/ (phil.wahba@thomsonreuters.com; +1 646 223 6128; Reuters Messaging: phil.wahba.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Jan 10 (Reuters) - U.S. shoppers are set to spend more in 2010 as purchasing power increases and wealth rebounds but a big shopping spree in the next few years is not in the cards, according to a study released on Sunday by consultant Deloitte Touche Tohmatsu, and STORES Media.
Instead, U.S. consumers will stay focused on saving money to rebuild the trillions in wealth lost as a result of the worst recession in the past two years since the Great Depression.
Despite what Deloitte called a 'sharp' rebound in fundamentals such as hourly wages and pent up demand, those events may have permanently made consumers more cautious.
'They're in a position to spend,' said Ira Kalish, the director of consumer business for Deloitte Research in the United States, at a National Retail Federation conference.
'Whether they will or will not depends on their level of confidence,' Kalish said, warning that U.S. consumer behavior would be particularly hard to forecast.
He predicted shoppers would put off spending on big ticket items and remain value-oriented for the foreseeable future.
Kalish said consumer spending, which now makes up about 62 percent of the U.S. economy, will grow more slowly in the United States and Britain and other consumption-led economies for several years as households pay down debt.
But consumer spending in countries such as China and other countries with large trade surpluses are set to grow more quickly.
REBUILDING WEALTH
In the long term, the rebound in U.S. consumer spending will be constrained by what Kalish expects will be higher taxation levels, a still sluggish housing market and a weaker U.S. dollar that would make imports more expensive.
'In the next five to 10 years, it is going to be a rough environment for U.S. retailers,' he said.
Despite a stock market that has begun to rebound and housing values that have stabilized, U.S. shoppers will keep finding it hard to borrow against their homes or stock portfolios as banks remain ham-fisted in their lending.
Elsewhere, shoppers in the Eurozone, contending with rising unemployment, will get some relief from generous unemployment benefits, while British shoppers will still be hamstrung by lower home values against which to borrow money, Deloitte found.
The slight uptick in expected consumer spending will come on the heels of a drop in margins among the world's 250 largest retailers in the fiscal year ended last June, when profitability fell to 2.4 percent from 3.7 percent the year earlier, according to the study.
Sales during that period rose 5.5 percent at those retailers, which include U.S. chains such as Wal-Mart Stores Inc, supermarket chain Kroger Co and warehouse operator Costco Wholesale Corp, as well as French grocer Carrefour and German retailer Metro .
(Reporting by Phil Wahba; Editing by Diane Craft) Keywords: DELOITTE/ (phil.wahba@thomsonreuters.com; +1 646 223 6128; Reuters Messaging: phil.wahba.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.