Tough sledding for consumer

Interesting session at the Milken Global Conference on whether the consumer is really back. The answer is not really. "I think it's going to be a really slow recovery," said Lynda Resnick, owner of POM Wonderful and FIJI Water. The March jump in retail sales, much ballyhooed as the start of a stronger-than-expected recovery, is not all that indicative of what's going on, according to Gary Loveman, chairman and CEO of Harrah's Entertainment (owner of Caesars in Las Vegas).

Part of what has people feeling better than they should is that an awful lot of retail capacity has disappeared. So if you're selling consumer electronics, there are now 700 fewer Circuit City stores competing with you. It's not that surprising that same-store sales among those remaining in business are doing relatively well."

Loveman noted that while folks are still coming to Vegas, they have become more price sensitive, checking online for the hotels that are dropping room rates.

Our concern is that the associated spend while they're with us is down. So I'm sorry to report that you could walk into Caesars Palace today and find customers dragging coolers through the lobby filled with low-quality beer. My friends at City Center recently, to everyone's astonishment, ran a $1 beer night in a $9 billion asset.

"Consumers are in tough shape," said Stephen Roach, chairman of Morgan Stanley Asia. He points out that for all the talk about an increase in savings, Americans remain wildly over-leveraged, the result of spending way beyond their means.

Here's the link to the video. It's long, but if you're looking for a good overview of consumer spending, this is a good place to go.