What Do Our Retail Sales Say about the Economy?
Retail Sales are heavily monitored by economists and investors . The retail sales indicator follows the dollar value of merchandise sold within the retail trade making a sampling of companies involved in businesses of selling products. The retail sales report can cause a higher than average volatility. This indicator is a valid predictor to inflationary pressure which causes decreased cash flows in companies.
The Fed can curb possible inflation if, for instance, a dramatic increase in retail sales happens mid business cycle which can lead to a short term hike. Retail sales get publicity and are easy to understand in ways relatable to the average consumer. Valitile components of retail sales show underlying demand patterns .
According to a recent article, “Retail Sales, Consumer Confidence and Producer Prices Decline,” clothing sales have dropped by 0.5 % in September and department store sales were down 0.9%. Also in September, electronic sales and food and beverage sales increased 0.9%. General Merchandise had a 0.4% increase and Net retail sales rose in 9 of 13 major categories.
Partial blame to weak spending goes to the Government shutdown but Lindsay Piegza, chief economist at the investment firm Sterne Agee said that regardless of Washington debacle, the weak trend was already established due to a tepid job creation and minimal income growth.
The conference board has shown the consumer confidence index is down to 71.2 compared to 80.2 in September. The debt crisis and government shutdown has taken a serious toll to consumers’ expectations. Nonetheless similar declines in confidence, fiscal cliff discussions and the government shutdown in 95′-96′, confidence will remain volatile for the next several months. An article published back on September 13th says that the economy is on a slow pace by their review of retail sales. Augusts 0.2% retail sale increase was seen from automobile purchasing and goods such as furniture and electronics. All decreasing sales were the receipts for clothing, building materials and sporting goods.
Clothing store receipts decrease is the lowest in 1 1/2 years. Food and energy costs were unchanged in August. Falling oil prices stemming from falling exports out of Libya and selling the commodity for profits show soft US economic data. Reuters said “crude prices shot up on Tuesday, exports from Libya dropped to approximately 250,000 barrels per day, down from an overall capacity of 1.25 million barrels per day, due to labor protests disrupting operations at major oilfields and ports.
Looking at the economic indicator of retail sales, June saw Americans buying cars and trucks at a pace not seen since 2007 which is a sign of consumers knowing how to spend as household wealth and the labor market improve. Summer declarations of economic improvement were optimistic in consumer spending. In regards to automobiles, the need to replace aging vehicles, attractive financing offers and steady employment will keep the car industry profitable. Economists in the summer were saying that economic indicators will continue to improve and consumer spending growth pace is slowly picking up. Factory growth, consumer price index and Costco Wholesale all saw gain this past June. This summer seemed to be a promising trend in our Economy, but after August things seemed to fall short, slow and stagnant.
http://www.bloomberg.com/news/2013-07-15/retail-sales-in-u-s-increased-less-than-forecast-in-june.html
http://www.reuters.com/article/2013/09/13/us-retail-sales-idUSBRE98C0IA20130913
http://www.reuters.com/article/2013/08/13/us-usa-economy-idUSBRE9770K220130813