Actual U.S. savings rate may have hit 6% in February

BusinessWeek is reporting that the actual savings rate for most Americans may have risen to 6.4% in February, a significant rise from last year when the savings rate hovered near zero.

The official statistics from the Bureau of Economic Analysis show that personal spending fell by 0.4%, and that the savings rate rose to 4.2%. Those figures, however treat as spending fixed costs like healthcare and education over which consumers have little control. With those categories removed, it appears that "pocketbook spending" fell by 3.1%, and that the savings rate hit 6.4%.

The savings rate has historically hovered near zero as Americans borrowed more than they earned.

Are retail stocks signaling a recovery?

Is a jump in the share prices of some retailers an early sign that the economy has seen the worst of the recession, and an upswing is just around the bend? That’s a possibility, according to a TheStreet.com report. The article points out that the S%P Retail Exchange-Traded Fund hit a low of $14.81 back in November, and is now trading at close to $24, a gain of 60 percent in just four months. At the same time, the Dow Jones Industrial Average dropped 10 percent. “If retailers are indeed among the early indicators that the economy has reached a bottom, the four-month turnaround in the retail sector could be an upbeat sign,” the article states. The fund features a wide range of retailers, including Walmart, Target and Amazon.com.

"All of the most leading indicators of a Main Street bottoming are basically seen first on Wall Street," James Paulsen, chief investment strategist with Wells Capital Management, told TheStreet.com. "So when you get a relative outperformance of retail stocks, it's suggesting that the worst may be over for the consumer when these stocks are pricing in a recovery. It's a pretty strong indicator."

Of course, the performance of the fund is no guarantee that the economy is about to turn around. After all, as we reported earlier today, consumer confidence remains near record lows. And at least one retailer isn’t likely to see its fortunes rise anytime soon: Gottschalks, a 105-year-old regional chain with over 60 stores, was sold to liquidators yesterday. Going-out-of-business sales could start as soon as this week, and the chain expects to be completely liquidated by July.

Consumer confidence holds steady near record lows

Consumer confidence barely inched up in March but hovered around all-time lows, the Conference Board's monthly study found.

The Consumer Confidence Index was measured at 26.0 in March, up from 25.3 the month before.

The Conference Board identified the main culprit behind Americans economic worries: job cuts.

"Apprehension about the outlook for the economy, the labor market and earnings continues to weigh heavily on consumers' attitudes," Lynn Franco, Director of The Conference Board Consumer Research Center, said in a statement. "Looking ahead, consumers remain extremely pessimistic about the short-term future and do not foresee a turnaround in economic conditions over the coming six months."

Only 9.1 percent in the survey anticipated that business conditions would improve in the next six months, although that's up from the 8.5 percent who said the same thing in February's survey.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS.

Numbers show Americans took home and spent a little less in February

Americans' spent a little less in February than in January, as we got a little less out of our paychecks.

Personal income in February 2009 declined 0.2 percent, according to new numbers from the Commerce Department, and real personal consumption expenditures--or what we spent--declined by the same amount.

That's a change from January when income and spending increased.

The cost of what we buy continued to go up, as well. Consumer prices increased 0.3 percent in February, according to Commerce's Bureau of Economic Analysis. It's the second month in a row with that increase. In the past year, consumer prices are up 1 percent.

Survey finds online shoppers may be moving toward "spending cautiously"

While the economy has not emerged from the recession, some consumers may be ready to start spending their money again--albeit more cautiously than before--a new study of online shoppers found.

Half of the online consumers asked recently by PriceGrabber.com said they were making a concerted effort to cut back in the past few months, but that number is down from the 59 percent who said the same thing in October of last year.

"The recent March 2009 survey reflected that online consumers’ efforts to cut back have reached a plateau, possibly because they have implemented savings strategies and reassessed their budgets," PriceGrabber.com wrote in its Consumer Behavior Report (PDF).

The current recession will likely have long running effects on consumer habits, according to the survey of 4,239 online consumers which was conducted from Feb. 10, 2009, to March 9.

Seventy-one percent said they would continue to "use the saving strategies you are implementing to weather the economy" once the recession recedes. Only five percent said they would go back to previous spending habits.

When shoppers decide they are ready to buy, this study found they are turning to the Internet more often.

Nine out of 10 of those surveyed said comparing prices online reassured them about getting the best deal.

The same proportion--91 percent--said that they shopped online in this tough economy because "researching products online makes me feel more confident about my purchases."

If you're one of those people who wants to do online research about the products you're planning on buying, ratings and reviews from Consumer Reports are a pretty good place to start.

Buffett: The economy has "fallen off a cliff" and government will "play an enormous factor" in recovery

Warren Buffett, the billionaire investor called the "Oracle of Omaha," went on television this morning to make some predictions about where the economy was heading, and what he sees is not necessarily pretty.

The economy is in real trouble, Buffett said during a three-hour appearance on CNBC, and it is forcing everyday people to change their lives.

"It's fallen off a cliff, and not only has the economy slowed down a lot, people have really changed their behavior like nothing I've ever seen," Buffett said.

"And I've never seen the consumer or the Americans just generally, more fearful than this. And they're also confused. And you can get fearful very quickly, but you don't get confident, you know, in five minutes," he said.

House subcommittee looks to make used car buying safer for consumers

The House Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection held a hearing this week to examine the challenges facing consumers in the used car market.

Chairman Bobby Rush compared the problems plaguing the used car market to those that imperiled the housing market.

"Evidence suggests that fraudulent practices with regard to both the condition and financing of used cars are on the rise," Rush said. "When it comes to the condition of vehicles, consumers are too often unaware of previous damage inflicted on the vehicle.”

Last year a lawsuit forced the Department of Justice to develop a National Motor Vehicle Title Information System (NMVTIS) to provide consumers with instant access to the salvage history of their potential vehicle. Only 13 states are taking full advantage of the system, while 14, including California, provide data to the federal government but bar their citizens from using it as a resource.

The Subcommittee questioned the effectiveness of the Federal Trade Commission's rulemaking process. The FTC is responsible for the Used Motor Vehicle Trade Regulation Rule, otherwise known as the Used Car Rule, which requires to dealers to disclose on a sticker basic information including whether or not they provide a warranty.

Rush was particularly interested in the effects of the digital divide, and whether low-income consumers would be able to access and benefit from the database. As a remedy, Rush suggested that the FTC include a provision in the Used Car Rule requiring dealers make vehicle history reports available at the time of sale.

Rush also probed the relationship between dealers and creditors, which can often burden consumers with higher prices and unfavorable terms. "Too often the dealership and the creditor work together to needlessly saddle customers with high interest loans or exorbitant fees," he said. "Such discretionary practices known as “loan packing” and “dealer markups” have a disparate impact on people of color, particularly African American and Latino consumers."

The industry defended the practices as beneficial to "credit-impaired" consumers.