Many Americans suffering from serious debt problems are finding that they don’t have the financial resources needed to shop for retail products. Moreover, the debt issues faced by millions of people in the U.S. are having a significant negative effect on US corporations, particularly businesses in the retail industry. Put simply: without money, American consumers are not making the kinds of purchases needed to boost up the struggling economy.
US retailers are going out of business left and right, with many companies forced to declare bankruptcy because their corporate debts have become too difficult to handle. In April 2016, retail sales declined by nearly three percent. In May 2016, the following month, retail sales got even worse and shrunk by almost four percent. Beyond that, many retail owners and operators fear that the rest of 2016 is going to be an even tougher time. For instance, Moody’s Investors Service, a major credit rating service, recently shifted its outlook for 2016 retail sales from “positive” to a far less optimistic “stable.” The downgraded expectations for retail sales were based on an analysis of four sub-sectors of the retail industry, including apparel and footwear, discounters and warehouse clubs, department stores, and office supplies. In all four areas, the credit rating service experts foresee diminishing sales throughout the rest of 2016.
It’s not just bond credit rating companies noticing that more and more U.S. consumers are struggling to come up with the cash to make retail purchases. Bank of America recently analyzed the data from users of credit cards and debit cards and observed a sharp decline in retail product purchases, including clothing and apparel, home goods, and electronics.
Consumer Debt, Declining Corporate Profits Might Not Get Better Anytime Soon
As Wall Street has been hit hard in recent months, some financial analysts are looking ahead and not seeing good news on the horizon. Estimates for the S&P 500 do not paint a pretty picture, with some financial experts and market observers predicting a decline of nearly six percent in the upcoming quarter. This would mark the fifth-consecutive quarter of shrinking corporate profits in the U.S.
The reality is that the entire economy suffers when Americans stop shopping – and right now a lot of American consumers are buried under a mountain of debt. According to data compiled by America’s Research Group (ARG), approximately 26 million Americans are “too poor to shop” because they either aren’t earning enough income or can’t keep up with their debt obligations.
For more information, check out the BusinessInsider.com article, “Americans Are Becoming Too Poor to Shop.”
If you are struggling with credit debt or any other kind of debt problems, you should talk to a qualified debt management and bankruptcy attorney immediately. Joel R. Spivack, Esq., is an experienced debt relief and bankruptcy lawyer who can offer guidance when it comes to debt-related issues in New Jersey. Contact Mr. Spivack anytime to schedule a free consultation.