Local consumers' shopping shows no signs of dropping
Birmingham News
April 27, 1999
By Roy L. Williams

Around Birmingham and the state, consumers are dropping big bucks on all kinds of purchases. Economists say the shop-'til-drop frenzy shows no sign of letting up.

"Consumer spending is the strongest thing driving the U.S economy right now," said Ahmad Ijaz, an economist at the University of Alabama's Center for Business and Economic Research.

The center had forecasted that Alabama's economy would expand by 2.9 percent in 1999, but it recently raised that figure to 3.2 percent, in part because of strong consumer spending.

So what's driving the shopping spree? Ijaz credits three factors - rising consumer confidence, near-record low unemployment rates and a surging stock market.

"The stock market has created a wealth effect," Ijaz said.

Rising sales of big-ticket items such as cars and furniture are a sign that consumer spending could remain strong the rest of the year," said Rose Bryant, a sales consultant at Marks Fitzgerald Furniture in Irondale.

Kimberly Oden-Webster, a Leeds management consultant, said high consumer confidence and heavy spending are linked.

"When you feel the economy is strong, you're definitely more inclined to spend more on goods, leisure time and entertainment," she said.

Not everyone believes the pace of spending will continue. Kenneth and Jeannette Taylor of Birmingham, while shopping in Century Plaza last week, predicted a slow down in the economy.

"I don't think it's going to last. It's not making me spend anymore," Mrs. Taylor said.

Ijaz acknowledged that there are warning signs in the air, particularly the surge in consumer debt. More that 2 percent of personal income was consumed by monthly bills from credit cards and other financed purchases last year. In 1992, it was 16.8 percent.

"People are living beyond their means because society allows them to," said Rita Turner, director of Metropolitan Financial Management in Birmingham.

While debt levels are high, Ijaz said they aren't a problem as long as consumers can manage the payments.

"I'm not sure how much longer we can keep going like this," Ijaz said. "Eventually, that money has to be paid back."