Friday AM January 23rd, 2009
by: Ed Mayberry, January 23, 2009 3:01:09 pm
There are retailers opening new stores in Houston over the next year, such as Best Buy and Dollar Tree, but there have also been recent store closings, such as Linens & Things and Circuit City. A new report says Houston's economy has started to feel the weight of the national economic hardship. Matt Keener with CB Richard Ellis says consumers are waiting on the sidelines.
"We've trained consumers to wait for the basement bargain moment. And so right now, those consumers are perceiving that the bottom's not here, yet. And there are some that have to buy now, for whatever reason, but the vast majority are waiting until they feel like the market has bottomed out, and then they're gonna buy in. So what we will see as the first sign of the reversal of the recession — in Houston in particular — is that we'll see a sudden influx into durable goods like automobiles and electronics and other categories that recently or currently are really taking a hammering, but that's because we got a lot of people waiting on the sideline."
Houston's cost of living is 11 per cent below the national average. The average household income is 3.6 per cent above the national average. But Keener says consumer confidence is critical.
"Well, so much of consumer spending is driven by consumer confidence and that confidence is driven by perception, so perception becomes reality. And so if the consumer perceives that they are at risk, much like they see a lot of their family members or others around the country that are certainly at risk through layoffs or compensation reductions, and what that has transposed itself into is a change in spending habits and a change in where they are spending their money. First of all, they're spending less; secondly they're spending that money at discounters, value-oriented retailers and particularly consumer staples like groceries."
The report notes Houston's unemployment rate is below the national average. Houston ranked first among other Texas cities in net annual job gains with a 2.2 per cent increase.
Ed Mayberry, KUHF Houston Public Radio News.