Posted on September - 13 - 2010
Rising retail sales diminish double-dip recession chatter
Despite the many uncertainties facing consumers these days, consumer confidence appears to be slowly perking back up, according to the latest government survey of the nation’s retailers. The U.S. Department of Commerce reported this morning that retail sales in August grew 0.4%, versus the forecast offered up by Bloomberg News of 0.3%, while ex-autos, sales increased a more robust 0.6%, topping the estimate of a 0.4% rise.
Looking at so-called “core sales,” which also strips out a 1.9% jump in sales at gasoline stations and eliminates the push from higher prices at the pump, purchases grew by a respectable 0.5% in August.
A better-than-expected back-to-school shopping season aided sales at many retailers, suggesting that consumers are not turning their backs on what so far has been a sluggish and uneven recovery.
The latest piece of data is raising hopes that the economy may be stabilizing following a noticeable slowdown during the summer months. However, consumers are still being hobbled by a stagnant job market, and layoffs, as measured by weekly jobless claims (see chart), have been stuck in a narrow but elevated range since the start of the year.
Fed Chairman Ben Bernanke said last month that consumer demand appears to have been “less vigorous” than expected, as many consumers have been focusing mostly on necessities and eschewing non-discretionary purchases in favor of paying down debt and boosting savings.
The drop in housing prices over the past two years has cut deeply into wealth, dealing a financial blow to balance sheets and depressing spending. And the lack of any meaningful gains in employment has restrained income growth and also capped consumer outlays.
Nonetheless, recent data suggest that economic activity may be starting to bottom, and Bernanke said he believes “the preconditions for a pickup in growth in 2011 appear to remain in place.”
The modest gain in sales last month is encouraging and is signaling that the economy could be starting to emerge from the summer doldrums. Few, however, anticipate anything close to the kind of robust recovery needed to make a significant dent in the unemployment rate.
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