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Fake News: A Perfectly Good Retail Sales Report (#GotBitcoin?)

Fake News: A Perfectly Good Retail Sales Report (#GotBitcoin?)

U.S. retail sales disappointed in February, but the overall picture is surprisingly strong. Fake News: A Perfectly Good Retail Sales Report (#GotBitcoin?)

Fake News: What initially looked like a bad retail sales report was actually pretty good.

Retail sales fell 0.2% in February from a month earlier, the Commerce Department reported on Monday, falling well short of the 0.2% gain economists were calling for. Excluding auto sales, the drop was an even-worse 0.4%; economists were looking for a 0.4% increase.

But sales figures for January were revised substantially higher. They now show an overall gain of 0.7%, which compares with an initially reported gain of just 0.2%. The effects of the government shutdown, worries about the stock market, and inclement weather didn’t weigh as heavily on January sales as they first appeared.

That isn’t to say that the first quarter wasn’t soft. As a result of the steep retail decline in December, the starting point for spending this year was low relative to the fourth-quarter average. That, in turn, will weigh on gross domestic product growth in the first quarter.

How weak won’t be entirely apparent until March retail sales data comes out later this month. There is some hope for improvement. Tax refunds were delayed by the government shutdown so money that would typically have been received, and spent, in February, likely got spent in March instead.

And what about the second quarter? Hiring is strong, unemployment is low. and wages have been gaining ground—all of which ought to continue to support spending. Sales might not be poised for a massive surge, but worries that consumers were throwing in the towel probably will be unfounded.

Updated: 12-13-2019

Holiday Retail Sales Had a Lackluster November Start

Report signals slower-than-expected start to critical holiday shopping season.

Shoppers are heading into the U.S. holiday season with restrained cheer.

Consumers held back on purchases of discretionary items ranging from clothes to electronics in November. Retail sales excluding cars and gasoline were unchanged from the previous month, the Commerce Department said Friday. When those volatile categories are included, sales rose 0.2%, seasonally adjusted.

Lackluster sales at the start of the holiday shopping season signaled consumer spending, which accounts for two thirds of the U.S. economy, could be softening as the fourth quarter progressed.

November is a key month for retailers, especially for department stores, clothing outlets and online sellers during the holiday shopping season. The month includes Thanksgiving Day and Black Friday, days in which Americans crowd malls and shop online for deals.

Due to a late Thanksgiving, there are six fewer days in the holiday-shopping season this year compared with 2018. Cyber Monday fell in December this year and wasn’t accounted for in Friday’s report.

Kim Lefko, chief marketing officer at Ace Hardware Corp., based in Oak Brook, Ill., said “retailers would love to have had one more week” for the holiday season, but she added “sales going into Thanksgiving week and since then have been steadily strong.”

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The Commerce Department said sales in November declined sharply across categories that are closely tied with holiday gift-giving, including clothing, electronics, department and sporting goods stores. Spending at bars and restaurants also dropped 0.3% last month, the steepest monthly decline since last December.

Retail sales account for about a quarter of consumer spending. Friday’s Commerce report doesn’t track spending on most services, such as health care and housing, and the figures aren’t adjusted for inflation.

“In general, the tone for the consumer is good but it’s not one of runaway strength,” said Stephen Stanley, chief economist Amherst Pierpont.

He added that “we’ve seen so many other indications that consumers are strong,” pointing to higher sales recently reported by Costco Wholesale Corp.

At Rolling Oaks Mall near San Antonio, Phillip Iversen said while most of his holiday shopping is done online, certain deals still bring him to the mall for Black Friday promotions.

Mr. Iversen found a waffle maker at Macy’s for about $7 on Nov. 28.

“I think they have to have the price that low now,” the 35-year-old said of the deal.

November sales at electronics and appliance stores rose 0.7% last month but were down 1.5% from November 2018. Sales at nonstore retailers, a category that includes internet merchants like, were up 0.8% from October and grew 11.5% from November 2018.

Richard Derr, owner of Learning Express Toys in Lake Zurich, Ill., said “this has been the strangest season I have ever seen for toys.” The season started slow with weak months in October and November, and demand for December has only just started to pick up.

“There’s just this malaise that we see in shoppers. We know it’s not their pocketbooks,” he said, citing the strong labor market and rising incomes. “There’s just an overhang that we see in shoppers that they’re really, really delayed this season.”

Data on retail sales can be volatile from month to month, although the broader trend suggests momentum is slowing. Year-over-year retail sales increased 3.3% in November, a pullback from the 4.4% pace clocked just three months ago.

Sales at motor vehicle and parts dealers, which make up about 20% of total retail sales, rose 0.5% in November. Gas station sales advanced 0.7%.

Still, economists and business executives say that household spending continues to be supported by a low unemployment rate and rising wages.

“The U.S. consumer is healthy, and the housing environment is stable and provides support for home improvement demand,” Richard McPhail, finance chief of home-improvement chain Home Depot Inc., said at an investor and analyst conference on Wednesday.

While global uncertainty and trade tensions have taken a toll on business investment, consumer confidence remains high. The University of Michigan’s preliminary index of consumer sentiment rose to 99.2 in December, up from 96.8 in November.

Consumers are the main driver of the U.S. economy, and they continue to benefit from a low unemployment rate and rising wages in the eleventh year of the current economic expansion.

Still, the Commerce Department report paints a more pessimistic picture of the start to the holiday season than separate data that suggested stronger sales, particularly in online spending.

Online holiday sales were up 14% from a year ago at $108 billion through Thursday, according to Adobe Analytics, which tracks activity on thousands of websites.

Weaker than expected retail sales in November suggests the pace of consumer spending eased somewhat as the fourth quarter progressed, which will feed into the broader pace of economic growth in the fourth quarter. On Friday, forecasting firm Macroeconomic Advisers projected a 1.8% pace for the fourth quarter. The economy expanded at a 2.1% annual pace in the third quarter.

Updated: 11-18-2020

U.S. Retail Sales Climbed At A Slower Pace In October

Consumers increased their purchases modestly in early weeks of the holiday season.

U.S. retail sales rose in October at their slowest pace since the spring, another sign the nation’s economic recovery is losing steam as coronavirus cases surge across the country.

Consumer-spending data from private companies suggest shoppers turned more cautious this month, too, as last month’s jump in virus cases accelerated in November, prompting some officials to impose new restrictions, mask mandates and other mitigation strategies to slow its spread.

“We’re going into a difficult winter,” said James Sweeney, chief economist at Credit Suisse, pointing to rising Covid-19 infections, new local business restrictions and dimming prospects for a fresh government relief package this year.

Slowing payroll gains and waning government assistance mean “however you cut it, we should have weaker consumer spending over the next quarter or two than we had this summer,” Mr. Sweeney said.

The Commerce Department said Tuesday that retail sales, a measure of purchases at stores, restaurants and online, rose a seasonally adjusted 0.3% in October from a month earlier. That was well below a 1.6% increase in September, and it marked the smallest monthly rise in retail sales since May, when spending rebounded from sharp declines in the early phase of the pandemic.

While spending on vehicles, electronics and at home-improvement stores increased last month, sales slipped in key categories such as grocery store, clothing and restaurant spending.

JPMorgan Chase & Co.’s tracker of 30 million credit and debit cardholders recorded a 4% decline in spending from a year earlier in the week through Nov. 13.

For much of October, the new coronavirus cases reported each day rose faster on average than during the week prior, according to a Wall Street Journal analysis of Johns Hopkins University data. By the middle of the month, the average number of new cases reported each day increased to more than 50,000.

That more than tripled in following weeks to more than 166,000 new cases reported Monday. The U.S. has now reported more than 11.2 million confirmed infections, Johns Hopkins data show.

“I have to spend wisely because we’re in a pandemic. You want to keep yourself healthy,” said Michelle L. Busch, owner of Washington, D.C.-based events company Event Solutions DC.

Ms. Busch’s spending has mostly been focused on her business, with occasional luxuries that include working out with a personal trainer, subscriptions to fitness apps and buying fresh fruit and vegetables.

The 42-year-old plans to stay home for the holidays this year since the big gatherings she usually attends are canceled. “It kind of makes me sad. The holidays are going to be really different,” she said.

Online shopping continues to flourish. Sales increased 3.1% in October from the prior month at nonstore retailers, a category that accounts for online merchants, according to Tuesday’s Commerce report. Retailers pushed an early start to the holiday shopping season in October with promotional events such as Inc.’s Prime Day.

Walmart Inc. reported Tuesday that e-commerce sales in the U.S. jumped 79% in the quarter ended in late October. People are making fewer trips to Walmart stores, shifting more spending online and stocking up when they do go to stores, the company said.

The retail giant’s comparable U.S. sales, those at stores or digital channels operating for at least 12 months, rose 6.4%—a slower pace than earlier in the coronavirus pandemic even as shoppers continued to buy up food and cleaning supplies and it pushed early holiday deals.

Retail sales can be volatile from month to month and subject to large revisions. Other data—which include declining jobless claims in the week ended Nov. 7 and rising employment and manufacturing and service activity in October—point to an economy that continues to recover from sharp drops in output earlier this year.

The Federal Reserve on Tuesday said its index of industrial production—a measure of output at factories, mines and utilities—rose a seasonally adjusted 1.1% in October. Output remains 5.6% below where it was in February, before the coronavirus pandemic hit, the Fed said.

Some sectors of the economy are profiting from low interest rates and consumer demand for improved residential and workspaces, as the pandemic keeps people working and studying at home.

The housing market, home-improvement businesses and online retailers have been particularly robust, reflecting the broader economy’s K-shaped recovery that has seen some businesses thrive and grow, while others struggle or fail.

Home Depot Inc. reported strong sales growth in its latest quarter as the retailer continues to serve people spending more time on home-improvement projects during the pandemic.

Home-builder confidence in the U.S. increased in November for the seventh straight month, hitting a fresh record, according to a measure from the National Association of Home Builders released Tuesday.

Still, other data indicate the broader economic recovery remains on fragile ground as coronavirus cases rise. Consumer sentiment fell in early November, according to the University of Michigan’s preliminary index for the month.

Americans’ outlook on the economy soured in the two weeks straddling the national elections, as Republicans grew more pessimistic and Democrats worried about the rise in coronavirus infections.

Fed Chairman Jerome Powell said Tuesday the increased spread of the coronavirus posed a significant risk to the economy in the months ahead and that it was too soon to say how positive developments about a vaccine would influence the outlook.

“Across the country, we’re seeing new cases. We’re seeing hospitalizations rise. And we’re seeing states begin to impose some activity restrictions,” Mr. Powell said during a virtual question-and-answer session. “The concern is that people will lose confidence in efforts to control the pandemic, and…we’re seeing signs of that already.”

Many retailers plan to close stores on Thanksgiving and have been offering earlier Black Friday deals online to reduce crowds—posing potential challenges during the key holiday season for an economy that leans heavily on shoppers’ willingness to consume.

Still, Jonathan Silver, chief executive of Affinity Solutions, a firm that aggregates consumer credit- and debit-card spending data, said he expects decent retail sales this holiday season as consumers who are saving on services such as travel spend those dollars on other things.

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