Back to School Without Any Spending?

The lead article in today’s New York Times is titled, “Retailers See Slowing Sales in Key Season.” It describes retail spending in the back-to-school season as the slowest since records began in 1995. Almost all categories are down including clothing, footwear and electronics. Only traditional school supplies remained constant. And even more ominously, the back-to-school retail season is considered a harbinger for Christmas shopping.

The article also noted that discount stores such as Wal-mart are doing a booming business and that shoppers are shopping smarter by researching bargains online before going out to buy.

In my opinion, this phenomenon shows the fallacy of a jobless recovery. As it is often noted, consumers are the engine that keeps the economy moving, and without adequate income, aka jobs, they will cut back on spending with a ripple effect through the entire economy.

So unless jobs are restored, the temporary glee on Wall Street will be unsustainable and short-lived. In other words, a Bush-style recovery is no recovery at all. We can only hope that President Obama’s stimulus package kicks in on a much more widespread basis than we have seen so far.

Wall Street seems to go through these bursts of “irrational exuberance,” and without any foundation behind this one, it will only amount to a few thousand financiers whistling in the dark.