Consider: During the past 21 years, the U.S. population has grown by over 22% while the dollar has lost about 37% of its purchasing power to inflation. When we adjust accordingly, the rebound in retail sales from the bottom in April 2009 merely gets us back to the per capita spending during the late summer of 1999.
Retail sales have been recovering since the trough in 2009. But the "real" consumer economy, adjusted for population growth still in a state of depression — 8.3% below its all-time high in January 2006.
Long Term Retail Spending Factors
Three factors that need to be discussed in light of retail spending trends are demographics, taxes, and changing consumer attitudes towards debt.
Boomers are past their peak earning years and headed for retirement.
Boomers in aggregate will need to downsize their lifestyles.
Those wanting to downsize their houses and simplify their lifestyle have no one to sell to. This will keep enormous downward pressure on home prices.
Those fresh out of college cannot afford and will not buy the cars and homes their parents had.
Many college graduates are despondent over being hundreds of thousands of dollars in debt with no way to pay it back.
Student loans programs benefit no one but schools and teachers. Eventually students will revolt.