During last year's Christmas season, registers at high-end stores rang merrily, while sales at low-end ones sputtered. Seven months later, the retail bifurcation is reappearing—just in time for Democratic vice presidential candidate John Edwards to dust off that "Two Americas" shtick. At Wal-Mart, U.S. same-store sales rose just 2.2 percent in June. The discounter-friendly Target chain likewise reported same-store sales growth of 2.2 percent. At the Gap, same-store sales for lower-end units Gap and Old Navy were down 2 percent, while same-store sales at its posher Banana Republic chain were up 11 percent. The more luxe the chain, the more same-store sales rose in June: Nordstrom, up 5.7 percent; Saks, up 8.5 percent; extreme consumption emporium Neiman Marcus, up 13 percent.
It's dangerous to make too much of shopping preferences and habits. After all, where we shop and what we buy don't necessarily define us as human, political, or moral beings, no matter what the editors of Cargo and David Brooks tell us. And, in isolation, same-store sales at several chains may not tell us much about Americans' assessment of the health of the economy.
Fortunately, the University of Michigan and the Conference Board both publish monthly gauges of consumer confidence. (See the "Explainer" on them here.) Both measures—produced by nonpartisan economists—find that Americans, on the whole, are confident—more optimistic, in fact, than they have been in two years. But they also found that while those with incomes above $50,000 have become more confident and optimistic, those with incomes below $50,000 have become less so.
If you log in to the University of Michigan's survey, follow the link to "Tables," and select Monthly Table One, you can see the consumer confidence levels of the over- and under-$50,000 crowds between December 2000 and December 2003. Generally speaking, those earning more than $50,000 have been more confident than their under-$50,000 counterparts in that time frame, but the figures tended to move in the same direction. The 2004 numbers haven't been released to the public, but the Wall Street Journal's intrepid Jesse Eisinger tracked some of them down. Now the over-$50,000 and under-$50,000 groups are moving in opposite directions. Between December 2003 and June 2004, Eisinger reported, confidence in the over-$50,000 set rose from 99.3 to 104.1. In the under-$50,000 set, it fell from 87.4 to 85.5.
The Conference Board shows the same split. In its most recent month, May, the index for over-$50,000 demographic was 112.1, the highest it's been since June 2002. But for those making under $50,000, confidence not only remains below its levels of July 2002, it has been falling in 2004. (Since January 2004, the confidence for the under $15,000 subset has fallen from 69.1 to 65.6; for the $15,000-$24,999 subset, from 85.2 to 69.3; for the $25,000-$34,999 subset, from 92.9 to 82.9; and for the $35,000 to $49,999 subset, from 95.2 to 93.6.)
It's axiomatic that rich people are likely to be more optimistic and confident than those with less money, so the raw differentials aren't that surprising. But in the past few years, the readings for all income groups have generally moved in the same direction. If the economy were undergoing a broad-based expansion, if a rising tide were lifting all boats equally, you might expect that trend to continue. But the views of the rich and poor are moving in opposite directions. The split results—the growing pessimism of the poor and the growing optimism of the rich—suggest the economy's improvement isn't helping everyone. That is bad news for a lot of Americans, but it may be good news for the Kerry-Edwards ticket.
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