Mall Executive Predicts Rebound in Consumer Spending

the staff of the Ridgewood blog

Hackensack NJ, in a recent second-quarter earnings call, David Simon, Chairman, CEO, and President of Simon Property Group—the nation’s largest mall owner—shared an optimistic outlook for consumer spending. Simon Property Group owns several notable malls in New Jersey, including The Shops at Riverside in Hackensack, Rockaway Townsquare in Morris County, and Menlo Park Mall in Edison.

Positive Outlook for Consumer Spending

Simon highlighted that higher-end consumers are in a stable financial position, while lower-end consumers are expected to resume spending as inflation pressures ease. “In summary, I think we’re going to cycle more positive in the lower-end consumer,” Simon told investors. “And I think the higher-end consumer, steady as she goes currently.”

Economic Trends and Market Reactions

Last Wednesday, Federal Reserve Chief Jerome Powell dismissed the idea of an interest rate cut, emphasizing that the economy was performing well. “It’s just a question of seeing more good data,” he remarked. Chicago Federal Reserve President Austan Goolsbee also noted that the latest economic data did not indicate an impending recession.

However, global stock markets recently took a hit after the U.S. Labor Department reported weaker-than-expected job growth in July, with only 114,000 jobs added and an unemployment rate increase to 4.3%. This triggered recession fears and led to significant market volatility. Stocks closed lower on Friday, and the selling continued into overseas trading on Monday.

Goolsbee advised against expecting emergency rate action from the Fed, emphasizing the dual mandate of stabilizing prices and maximizing employment. “There’s nothing in the Fed’s mandate that says stop market declines,” he said.

Consumer Sentiment and Retail Performance

Despite current economic uncertainties, American consumers feel optimistic about future conditions, as per forecasts from The Conference Board. However, concerns about elevated prices, interest rates, and economic uncertainty remain. Dana Peterson, The Conference Board’s Chief Economist, noted that these issues might not improve until next year.

According to the U.S. Census Bureau, food and retail sales in June were $704.3 billion, virtually unchanged from the previous month.

Optimism Among Mall Owners

Urban Edge Properties, which owns 35 properties in New Jersey, including Bergen Town Center in Paramus, has ambitious expansion plans in the Northeast Corridor. CEO Jeffrey Olson mentioned that they are in late-stage negotiations to acquire several high-quality shopping centers from D.C. to Boston.

Retail has shown resilience post-pandemic, contrary to earlier fears. Matthew Harding, CEO of Levin Management Corp., noted that even with the surge in online shopping during COVID-19, brick-and-mortar stores have survived. “If something was going to kill brick-and-mortar, that would have,” he said.

As consumer spending shows signs of recovery, mall owners and executives remain optimistic about the future of retail, hoping for sustained growth and stability in the coming months.

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