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    Default US retail sales rise less than forecast ...

    (snip)"Aug. 13 (Bloomberg) -- Sales at U.S. retailers rose less than forecast and consumer confidence held near an eight-month low, indicating the economic slowdown will persist into the second half of 2010.

    Purchases in July climbed 0.4 percent, led by autos and gasoline, figures from the Commerce Department in Washington showed today. A preliminary sentiment index for August rose to 69.6 from 67.8 the prior month, according to data from Thomson Reuters/University of Michigan.

    Consumer spending, which makes up 70 percent of the world’s largest economy, is unlikely to pick up in the absence of a recovery in the labor market. Federal Reserve policy makers this week made their first attempt to shore up a recovery they said was likely to be “more modest” than earlier anticipated.

    “The numbers are consistent with a sluggish consumer profile,” said Jonathan Basile, an economist at Credit Suisse in New York. “Things just don’t feel good enough in terms of the level of economic activity and the pace of growth. It reinforces the Fed’s concern.”

    Stocks fell for a fourth day after the report. The Standard & Poor’s 500 Index declined 0.4 percent to 1,079.25 at the 4 p.m. close in New York. The S&P Supercomposite Retailing Index dropped 1.4 percent and Treasury securities rose.

    Economists forecast retail sales would rise 0.5 percent, according to the median of 77 projections in a Bloomberg News survey. Estimates ranged from a 0.1 percent drop to a 0.9 percent gain. June sales were revised to show a 0.3 percent drop rather than the previously reported 0.5 percent decrease.

    Influence on Growth

    Excluding autos, gasoline and building materials, which are the figures used in calculating gross domestic product, sales dropped 0.1 percent in July after a 0.3 percent rise the prior month. Economists at Morgan Stanley in New York were among those lowering their estimate for consumer spending this quarter after the report.

    J.C. Penney Co., the third-biggest U.S. department-store chain, today lowered its profit forecast for the year, citing an “uncertain” outlook for consumer spending. Kohl’s Corp., the fourth-largest U.S. department-store chain, yesterday lowered its profit forecast for next year. "(snip)

    from


    First a word of caution. The 'sales' cited in these statistics are measured in US dollars, not quantity of items. Thus fewer gallons of gasoline being purchased, but purchased at a significantly higher price per gallon, shows up as an 'increase' in sales.

    Next, the retailers who missed sales expectations and who are now lowering forecasts for the balance of the year are positioned to sell to 'middle class' customers. This is indicative of 'middle class' customers pinching pennies, and thus shopping at 'bargain basement' retailers instead ... or 'middle class' customers simply spending less money overall for non-essential items.

    Lastly, the retailers reporting data to this statistic today are 'survivors' thus the data suffers from 'survivor bias'. In other words, the statistics do not take into account the possible reduction in overall sales due to other retailers going out of business ... they only compare 'same store' sales. Stated another way, if total consumer retail spending were actually the same, but if 10% of all retail stores had gone out of business, one would expect to see a 10% INCREASE in 'same store' sales numbers from the now lower number of 'surviving' retail stores.


    (snip)"The cost of living climbed in July for the first time in four months, pointing to a stabilization in prices that may ease concern a slowdown in growth will spur deflation, or a protracted drop that hurts the economy, figures from the Labor Department also showed today.

    The consumer-price index increased 0.3 percent, the most in a year and exceeding the 0.2 percent gain projected by the median forecast of economists surveyed. A gauge excluding volatile food and fuel costs, the so-called core rate, increased 0.1 percent, as projected.

    Rents Stabilize

    The report showed rents, the biggest component in CPI, increased for a second month, and the cost of clothing, used cars and tobacco climbed. Economists say the lack of inflation gives Fed policy makers scope to leave the benchmark interest rate near zero into 2011 to help invigorate the economy.

    “There’s been some firming in core inflation in recent months,” said Julia Coronado, a senior U.S. economist at BNP Paribas in New York, who accurately forecast the 0.3 percent gain in the overall prices. “This takes some pressure off the Fed in terms of deflation.” "(snip)


    Thus it would also appear that some of the price inflation that has been pushing up commodity prices recently is beginning to trickle through to retail sales as well - particularly so for food and fuel prices.

    ~
    Last edited by Melonie; 08-13-2010 at 03:47 PM.

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