New York City retail marches to a different beat

It's official-according to the Federal Reserve, New Yorkers have met the nation's economic woes with plastic in hand as they continued to spend in the third quarter of 2008. That's a marked contrast to the most recent national data that shows American consumers have become far more frugal. Spending is down in most regions even as we approach "Black Friday," i.e., the Friday after Thanksgiving that heralds the traditional Christmas shopping season throughout the U.S. Retailers are expecting thriftier customers with greater expectations. Naturally, no municipality will weather this financial storm unscathed. But New York is notable for having sustained fewer scratches than most. In fact, local consumer confidence has actually been on the rise since July. In our city, shoppers march down Madison to the beat of their own drum. The Fed's Mixed Bag On October 15th the Federal Reserve released its most current Summary of Commentary on Current Economic Conditions, commonly known as "The Beige Book." Divided between the larger national picture and local Federal Reserve districts, consumer spending is consistently described as "sluggish" and "weakened" by the report's contributing bankers, economists and business owners. Consumer spending in most cities is dipping, or at best delicately stable. In New York, the freshly released data indicates that credit conditions have tightened, while bank lending is described as either stable or lower for both consumers and businesses. The report also cites increases in regional loan pricing. Still, retail sales were only slightly below plan in September and inventories were said to be at or near desired levels. That's actually a rather positive assessment given the national picture at the moment. Regionally, The Fed describes New York City as "out-performing" even other areas within its relatively stable federal district in terms of sales gains. Inventories are reported to be at or near desired levels, and prices are reported to be steady to up moderately. Consumer surveys indicate some recovery in sentiment: the Conference Board's survey of Middle Atlantic residents showed confidence rising modestly in August and September after slumping to its lowest level on record in July; similarly, Siena College's survey of New York state residents shows some rebound in confidence in the third quarter. The point is that New Yorkers are still shopping. And that's good for everyone. Retailers Create Jobs In mid-October, the U.S. Census Bureau released its monthly Retail Sales Index, which measures retail sales from the previous month by a sampling of stores both large and small across the country. This number is closely monitored by financial analysts as an indicator of the nation's economic health. It is therefore much more than an economic litmus test, as it influences the stock market directly and, by proxy, anyone with an investment portfolio, retirement plan or stake in their employer's share value. The October Index reveals that advance estimates of September U.S. retail (which includes autos) and food-service sales declined slightly. That's a trend that may well be reversed as the all-important holiday shopping season begins, when the nation's retailers actually make their profits. By spending responsibly, shoppers keep people working and the economy humming. After the combination of the dot-com crash and 9/11, the U.S. economy could easily have slumped dramatically. Instead, the U.S. consumer kept the economy afloat. Consumer spending is approximately 70% of overall gross domestic product, so a continuing drop in retail sales will result in growing unemployment at the store and manufacturing levels, rippling throughout the greater economy. Discount and one-stop retailers have benefited as consumers stick to low-price merchants. Warehouse club operators are thriving as shoppers buy in bulk. Costco Wholesale and Wal-Mart both announced a same-store sales increase, which will save jobs, and likely create even more. They've got the money and the demand. The nation's stores also provide other, less measurable benefits. Shopping provides socialization, which is desperately needed in challenging times. It lifts moods, provides human contact, and gives people a feeling of control. Even the online retail sector has adapted with "social shopping," which combines social networking with e-commerce. Social shopping sites create an online experience that replicates shopping with a group of friends, aiming to give e-shoppers a similarly interactive, personal and communal experience. The self-proclaimed first and largest of these sites, Kaboodle, which was founded in 2005, attracts eight million monthly visitors, as well as a half million registered users who have created links to four million products. The key is to rev up spending, not overspending. Certainly, no one should buy beyond his or her means. But those who can afford to do so should get back to the shops to help repair our fractured economy. So go ahead and spoil yourself with that product you've been eyeing. Your purchase is more than an indulgence. It's an act of civic responsibility. Faith Hope Consolo is the chairman of the Retail Leasing and Sales Division at Prudential Douglas Elliman, New York, N.Y.