Retail Sales Surprise
The predictions were flying in the lead-up to yesterday’s
announcement by the Commerce Department of August’s retail numbers. Almost
all of them pegged the expected growth rate over July at 0.3 percent. At this
desk, we received at least two press releases that suggested we needed to interview
people because they had knowledge that the numbers would be even lower. The
gloom and doom express was going at full speed.
Today, we know the Commerce
Department came out with its numbers and, surprise, August sales were up a
better-than-expected 0.4 percent compared to July, which had also shown an
increase. The August numbers showed the highest increase in five months and
were up 3.6 percent over the same period last year.
Richard Berner, co-head
of global economics for Morgan Stanley, said too much focus is being put on
how little consumers are spending and too little on how they are improving
their ability to buy as a result of paying down debt.
"The deleveraging timetable is nearly a year ahead of schedule," he
told Bloomberg News.
Robert Doll, vice chairman of BlackRock, told the
news service, "I don’t
think enough credit has been given to that. The U.S. consumer is not dead."
Strauss-Kahn, managing director of the International Monetary Fund, told CNBC that
the government’s stimulus spending had helped avert an economic crisis, echoing
other reports in recent weeks.
"I think what the U.S. is doing today is the right thing. I think as
long as they will support (the recovery), finally it will pick up and create
On the subject of jobs, a report last month by the outplacement
firm Challenger, Gray & Christmas, said that while unemployment is high,
the pace of recovery is comparatively strong based on historical terms.
"By most accounts, we are barely a year into the recovery. At this point
in the previous two recoveries — following the 1991 and 2001 recessions —
the job market was actually getting worse. Many people are so caught up looking
at the weekly and monthly numbers, that they fail to look at the bigger trends,
which indicate just how much the job market has improved over the last 12 months,"
said John Challenger, chief executive officer of Challenger, Gray & Christmas,
in a statement.
"I’m not claiming the U.S. consumer has all its problems solved,
but it’s heading in the right direction," Mr. Doll told Bloomberg. "Talk
of the U.S. consumer being in dire straits was too negative."
Discussion Question: Has all the glass half-empty talk on the part of politicians,
analysts and others in the media distorted the true nature of the economic challenges
facing the U.S. and, perhaps, even slowed the recovery?
- Advance Monthly Sales for Retail Trade and Food Services – U.S. Census
- U.S. Accelerates in 2011 as Demise of Consumer Is Exaggerated – Bloomberg
- No Double-Dip, Stimulus Did Help: IMF Chief – CNBC
- Current Jobless Recovery Stronger Than After 2001 Recession, according to
a new analysis – Challenger, Gray & Christmas
- After 3 months of gains, job cuts plummet to 10-year low – Challenger,
Gray & Christmas