While jobs are easier to get and the turnaround in the housing market is gaining momentum, the improvements have not been enough to sustain higher levels of consumer spending for most Americans. Most are juggling tepid wage gains with higher costs of living.
Americans are still trying to digest the 2 percentage-point increase in payroll taxes, which took effect Jan. 1. That means that take-home pay for a household earning $50,000 a year has been sliced by $1,000. Gas prices are rising again, and on top of that, shoppers are being increasingly forced to pay for more of their children's school supplies, sometimes including books.
That has forced parents to stick to necessities. Major retailers such as Wal-Mart have noticed that they're staggering their purchases instead of having one big back-to-school shopping spree.
Amanda Simpson, 38 and the mother of a 6-year-old daughter and a 1-year-old boy, reflects the cautious trend.
Simpson said she is budgeting $150 for clothing and $50 for school supplies for her daughter. She plans to buy some of her daughter's clothes at local thrift shops and instead of buying one $35 pair of shoes, she will buy three $15 pairs.
She is staggering these purchases and says she needs to budget in case of surprise expenses.
"I am much more conscious of how I spend," said the Coppell, Texas, resident. "We are not in that position that we are going to get huge raises."
Helen Gym, 45, who has three children, ages 16, 14 and 10, said back-to-school clothing is not a top priority. Gym, whose children go to Philadelphia public schools, said the fiscal crisis there is forcing parents to pay for more supplies, which could mean books.
"We're doing what we can afford and we are trying to be thoughtful," said Gym, who works part time for a community organization. "I stopped doing the massive back-to-school [shopping] thing."
Against this background, Michael P. Niemira, chief economist at the International Council of Shopping Centers, expects that total sales for the back-to-school season will rise 3.1 percent from last year to $42.2 billion. That would be less than the 3.6 percent gain in 2012, but near the 3.3 percent average annual increase for the past 10 years.
Families with school-age children are expected to spend an average of $634.78 on clothing, shoes, supplies and electronics, down from $688.62 last year, according to a survey of about 5,600 shoppers from the National Retail Federation that was conducted by Prosper Insights & Analytics.
Costco said Thursday its U.S. and international revenue each rose 4 percent in the four-week period that ended Aug. 4, a performance that fell short of Wall Street estimates. Analysts surveyed by Thomson Reuters expected, on average, revenue growth of 5.1 percent for the total company and 4.5 percent and 5 percent, respectively, from the U.S. and international portions.
Gap, which operates its namesake stores, Banana Republic and Old Navy, reported late Thursday that revenue at stores open at least a year rose 1 percent in July. Analysts had expected an increase of 1.6 percent. By division, the company's namesake global business was up 7 percent, while Banana Republic's worldwide sales were down 1 percent and Old Navy's down 5 percent.
Among the bright spots in the reports was L Brands, which owns Victoria's Secret and Bath and Body Works. The retailer said that revenue at stores open at least a year rose 3 percent in July, better than expected, and the company raised its second-quarter earnings outlook. Analysts expected a 1.5 percent increase for the four weeks ended Aug 3.