Tuesday brought further evidence of what the US consumer is doing (or not doing) with their cash.
T.J. Maxx — the off-price clothing chain — reported its slowest same-store sales quarter in two years and a 1% rise from year ago quarter. Last year’s 1st quarter same-store sales rose 7%.
T.J. Maxx has been the darling of the retail analysts, since the company was able to fit into the narrative that aspirational shoppers were still strong, but they moved down the retail food chain to pick up off-priced designs.
That retail narrative has been played out where the consumer was moving down the price range from a Ralph Lauren and Nordstrom to a Macy’s and JCPenney down to T.J. Maxx and its sister company Marshall’s.
Well for T.J. Maxx the previous four quarters show revenue has not met the year ago quarter, which confirms to me that the consumer is staying home and not out buying clothing or home goods no matter the label, as I have pointed out numerous times previously.
So how does the consumer not trading down the price-point scale play out in the larger economic picture? Well 1st quarter GDP came in at 0.7%, which confirms my point that the consumer has checked out of buying since it accounts for nearly 70% of the national number.
If you look at the wage growth and the U-6 unemployment numbers over the last year or so you will see that middle class and lower wages have remained somewhat stagnant as the working part-time and looking for full-time employment has still remained high.
So according to the Federal Reserve credit card debt is very high as struggling consumers are defaulting on car loans at a very high rate, which confirms to me that there’s nothing in the budget for a new Spring wardrobe.