On the heels of the U.S. stock market setting an all-time record for the longest ever bull run – now at 3,454 days – heads of companies around the country are sharing their experience with the enhanced spending economy fueled by more confidence in the market. Recently, Target CEO Brian Cornell said that consumer spending is “back and has never been better.”
“There’s no doubt that, like others, we’re currently benefiting from a very strong consumer environment — perhaps the strongest I’ve seen in my career,” Cornell said during a Wednesday phone call with analysts, according to a report from CNBC.
The Conference Board’s report of the Consumer Confidence Index increased marginally in July, following a modest decline in June, which currently stands at 127.4 (1985=100), up from 127.1 in June.
Consumer spending, the acquisition of goods and services by individuals or families is the largest part of economic aggregate demand at the macro level. The Bureau of Economic Analysis (BEA) reports that U.S. consumer spending had its fourth-straight solid monthly advance in June, powered by steady income growth as the labor market tightens. Purchases rose by 0.4 percentage points, which accounts for approximately 70 percent of the economy. Incomes also increased by 0.4 percentage points in June, matching the May increase. The next reported numbers will come August 30.
Following second-quarter financial results, the retail giant’s shares skyrocketed after it beat analyst predictions on earnings, revenue, and comparable store sales. During a time when malls throughout America are showing a sharp decline in traffic and brick-and-mortar stores are being hurt by the online dominance in sales by Amazon, Target, on the other hand, has seen a big jump in store traffic.
“We’re seeing a great consumer response…unprecedented traffic,” Cornell said. “As we go back and look, we’ve never seen traffic growth like this.”
Nevertheless, in-store traffic was not the only reason for the jump in sales. The retailer also had a massive increase in digital sales, jumping by at least 40 percent during the second quarter, as the company has been put more emphasis on its online presence.
A robust U.S. economy, teamed with record-low unemployment and renewed consumer confidence, has allowed many retailers like Walmart, TJ Maxx, Kohl’s, Nordstrom, Macy’s, and others look to raise their profit outlooks for the full year, anticipating a strong holiday season.
Randal Konik, a market analyst with Jefferies, said that “The consumer is the strongest since ’99,” He added, “Companies are managing inventories very well, digital investments are paying off, real estate is being rationalized…[Christmas] will be much better than people think.”
As for continued economic growth, on August 16, the Federal Reserve Bank of Atlanta’s GDPNow estimate for third-quarter gross domestic product (GDP) growth was at 4.3 percent, far above the approximately 3.1 percent that is expected from the most widely reported blue chip consensuses.