Consumers are Using Cash Loans and Savings as Recovery Continues

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How the economy is recovering

The personal cash loan increased in usage this past holiday season. In November many people found themselves coming out of the recession with few options to manage Christmas gift purchases. Now that the holidays are over and people are recuperating financially, it’s time to put together some numbers as to how the economy is shaping up. Retailers have much smaller inventories than the past but also have slightly better-than-predicted sales receipts.

Inventories and Christmas

A lot of retailers are reporting low inventories. In fact, their inventories are so low that they have had to already bring in new orders to restock their locations. In former years, retailers were able to stock up enough product to last through the Christmas buying season and beyond. This year budgets were tight and overbuying was not an option. As a result, shoppers looking for after-holiday sales may have to search hard to find them.

NPD analyst Marshall Cohen said, “Retailers are much more nimble this year. Their ‘Plan B’ is to have new receipts at the ready.” He noted J. Crew and Coach as two stores that had already restocked their shelves for the post-holiday rush. Part of the higher profit margin can be attributed to ordering that was in line with weak demands. This allowed retailers to retain a higher price point on items and that is what brought in added profits.

John Lonski, chief economist of Moody’s, stated, “The latest holiday shopping season wasn’t a rip-roaring success, but at least it met or slightly exceeded expectations. Consumer spending is indeed in a recovery mode, which brightens prospects for 2010.”

Overall spending is on its way up

One of the indicators most economists have been watching closely is consumer spending. It fell to its low point at the height of the recession when the unemployment rate was at its highest. Spending rose 3.6% however from November 1st of this year through December 25th. That number was well beyond what industry insiders were predicting for the end of 2009. Studies are showing that consumers were using savings, personal cash loans and credit to rekindle the buying patterns of their pre-recession lives. That’s good news to the market because its full recovery is dependent on the reinvigoration of consumer spending in the US.

Despite the good news

Despite the good news with spending, there is still an issue with numbers for the holiday season. Analysts warn that it is still too early to truly gauge how well the market is recuperating from the economic downturn of 2009. Though there are some signs that things are on an upswing, there is still a period of recovery that every business and consumer needs to go through. Retailers are expected to extend their specials throughout January of 2010 in an effort to encourage spending. Lonski added, “The best thing businesses can do right now is to push for spending. That is going to mean creating deeper discounts and specials for customers. It’s imperative that businesses see how this encouragement is the only thing that will continue to turn the market around.”

Recovery after the recession

Though the recession is over, the US still needs to go through recovery efforts before it returns to normal. Consumers are still feeling their way in the dark, trying to best protect themselves from future financial disasters. In terms of spending though, they are ready to start making purchases. By using savings, personal cash loans and credit hopefully consumers will gain confidence in the market once again.

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