Nov. 18--Many consumers are in tip-top financial shape, but they're still cautious about spending, a Discover Financial executive said Wednesday.
"From a personal balance sheet perspective, the consumer is in the best shape they've been maybe in decades," David Nelms, chief executive of the Riverwoods-based lender, said at a Bank of America Merrill Lynch banking and financial services conference.
"Clearly, consumers could afford to spend more, but they're not, so there is a lack of confidence," Nelms said. "They've had a huge windfall from lower energy prices, and I would have expected them to spend some of that, and instead they paid down debt and saved."
Optimistic sales growth projections made in early 2015 for the retail industry haven't panned out.
The National Retail Federation said retailers' sales in November and December will grow by 3.7 percent over the previous year, down from the 4.1 percent increase in 2014.
"You're seeing retailer after retailer reporting disappointing sales," Nelms said. "We're going to have to get into next year to see if consumers actually pick up or stay very conservative."
However, a recent report by JPMorgan Chase Institute disagrees. It found that consumers are spending much of the money they've saved from lower fuel prices.
"For every dollar less spent at the gas pump, individuals spent roughly 80 cents on other things," the institute's report said. "Almost 20 percent of the gas savings were spent at restaurants, but department stores, entertainment and electronics and appliances also saw significant gains."
byerak@tribpub.com
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