Purchases reveal mood among consumers now

What we're buying -- and not buying -- says a lot about how consumers are feeling these days.

It also says a lot about the economy, considering that consumer spending accounts for 70 percent of U.S. economic activity. Every time we go out to lunch, buy a sweater or pick up a DVD, we're contributing to the retail sector, the biggest sector in the economy.

This week, companies from Home Depot to Target to Saks reported results for their latest quarters.

Here's a look at what people are and aren't buying:

HOME

WHAT WE'RE BUYING: More garden products and paint, especially in areas with high foreclosure rates, according to Home Depot. CEO Frank Blake told investors that as homes are sold as part of the foreclosure process, that spurs sales of paint and carpet upgrades.

Lowe's reported that small projects were big winners -- only the paint and nursery categories did better than a year earlier.

There was also solid demand in faucet repair and in parts for outdoor power equipment. Tiller sales were also strong as consumers planted more gardens.

WHAT WE'RE NOT: Home Depot said consumers continued to limit their purchases of bigger items such as appliances.

Purchases above $500 fell 16 percent compared with last year for Lowe's, which noted last year's second quarter included a federal stimulus package that gave most consumers $600, prompting sales of big-ticket items.

CONCLUSIONS: Consumers are staying close to home, and they want it to look nice. But they're not committing to big purchases. They're tackling more projects themselves, especially smaller ones, and they're planting gardens.

CLOTHES & BASICS

WHAT WE'RE BUYING: Target says the items people feel they need the most, like products related to health care, food and beauty, are doing the best.

More people were shopping at stores run by TJX Cos., like T.J. Maxx, Marshalls and HomeGoods. Sales of basics like sheets, towels and clothing were all strong.

Fashionable denim is doing well at Saks Inc. stores, the high-level retailer said, noting that the trendiest brands do the best.

WHAT WE'RE NOT: Clothes and home goods were weak in Target's second quarter, and Kathy Tesija, the executive vice president of merchandising, summed up the consumer mind-set in one word: "cautious."

TJX is seeing more people come into its stores, but they're not spending as much.

Limited Brands Inc., which operates Victoria's Secret and Bath and Body Works, said sales of fine fragrances and bras and panties were weak in the quarter.

Overall sales at Saks continued to slump.

CONCLUSIONS: Shoppers are still tightfisted and cautious. They're looking for bargains and aren't ready to resume shopping at pre-recession levels. But they still want to keep up with trends.

FOOD

WHAT WE'RE BUYING: Spam, Spam, Spam. Hormel said sales of its meat-in-a-can continued to rise in the quarter, gaining in the low double digits, while sales of other canned items and Hormel chili kept improving.

BJ's Wholesale Club said cereal, meat and household items made gains in its second quarter.

Heinz reported infant food and ketchup sales were strong.

WHAT WE'RE NOT: Hormel said customers bought fewer of its more expensive items, such as microwavable meals, while its food service division, which serves businesses like restaurants and hotels, continued to slump.

Sales of Weight Watchers Smart Ones entrees fell in the quarter, too, Heinz reported. It noted the frozen food category has been down for a year.

Heinz and Hormel said they were still competing with store brands and other generic products. Heinz said the trend was lessening, though.

CONCLUSIONS: Food prices still aren't low enough for consumers, who are shopping with savings in mind. They keep dropping down to store brands, and they're still willing to sacrifice convenient items such as frozen foods.