Retail sales are up 7.9% from December 2009 to December 2010. Although retail sales increased only .6% in December from November and were lower than expected, retail sales are now above the pre-recession peak in November 2007. Initially this appears good right? Bankruptcy rates in Florida and elsewhere should start to decline as consumers spend more and more people get back to work.
Not so fast. Much of these gains were in energy and food prices. Furniture and home furnishings rose a mere 2.3% year over year. Electronics rose only 2.6% year over year. Clothing sales will almost certainly rise significantly during this upcoming year but not due to an increase of demand, but rather due to cotton prices being in the stratosphere.
What does this mean for the average Floridian consumer? Well the middle class is being squeezed even more with declining wages and increasing costs of living. This leads to more debt to service when paychecks aren’t enough to pay the bills any more. Chapter 7 or 13 bankruptcy is no longer reserved for the divorced, injured, ill or unemployed. Now increasing numbers are filing bankruptcy when they just can’t pay the bills like in the old days.