WASHINGTON ? The outlook for the U.S. economy appeared dimmer Monday after a report that Americans spent less at retail businesses for a third straight month in June.
The report led some economists to downgrade their estimates for economic growth in the April-June quarter. Many now think the economy grew even less than in the first quarter of the year, when it expanded at a sluggish 1.9 percent annual rate.
Spending in June fell in nearly every major category ? from autos, furniture and appliances to building, garden supplies and department stores. Overall, retail sales slid 0.5 percent from May to June, the Commerce Department said.
Retail sales hadn?t fallen for three straight months since the fall of 2008, at the height of the financial crisis.
The weak U.S. spending figures were released on the same day that the International Monetary Fund slightly lowered its outlook for global growth over the next two years.
Stocks fell after the Commerce report was issued. The Dow Jones industrial average sank 74 points in early trading. Broader indexes also declined. Later in the day, stocks regained some of their losses.
?However hard you look, there?s just no good news in this report,? said Paul Ashworth, chief U.S. economist at Capital Economics.
Weakening retail spending could make the Federal Reserve more likely to act further to try to encourage more borrowing and spending by lowering long-term interest rates. The Fed?s policy committee will meet at the end of this month.
Most economists don?t expect new Fed action after that meeting. But some said Monday?s Commerce report, coming after three straight months of tepid hiring, makes some Fed action more likely by year?s end.
Fed Chairman Ben Bernanke will testify to Congress about the economy on Tuesday and Wednesday.
Despite the lackluster spending in April through June, retail sales were still 4.7 percent higher in the second quarter than in the same period in 2011. And the figures don?t include spending on services, which makes up about two-thirds of consumer purchases. Services range from doctor?s visits and plane tickets to rent payments and utility bills.
Spending figures for services aren?t yet available for June. But consumers have spent more on services each month this year.
Still, Ashworth said economic growth likely slowed to an annual rate of just 1.5 percent in the second quarter. That?s isn?t enough to lower high unemployment. The U.S. unemployment rate is 8.2 percent.
In Monday?s report, Commerce also said Americans spent less in April than previously thought. In part because of that, Michael Feroli, an economist at JPMorgan Chase, lowered his estimate of growth in the April-June quarter from a 1.7 percent annual rate to a 1.4 percent rate. And he lowered his forecast for the July-September quarter to a 1.5 percent growth rate, down from a 2 percent rate.
Chris G. Christopher Jr., senior economist at IHS Global Insight, thinks the economy grew at an annual rate of just 1.3 percent last quarter. He doesn?t see much of a pickup in the second half of 2012: The annual growth rate will likely stay below 2 percent, he said.
Christopher said the biggest problem is meager job growth. Americans have also been rattled by gyrating stock prices stemming from Europe?s debt crisis.
?Consumers are getting hit from all sides,? Christopher said, despite the benefit of sharply lower gas prices since early April.
Lewis Tipograph, owner of Kid?s Closet, a midpriced children?s clothing store in Washington, D.C., said his business has suffered since April. Customers are more uneasy, he said.
?Earlier in the year, people were feeling more optimistic,? Tipograph said. ?There was a convergence of a lot of good things. But now, people are feeling nervous.?
Some of the sting of Monday?s retail sales report was eased by a separate Commerce report that U.S. companies added to their stockpiles in May. When businesses step up restocking, they tend to order more goods, leading to more factory production and economic growth.
Some hope also emerged from continued gains in ?nonstore?sales ? a category that consists mainly of online purchases. E-commerce sales have strengthened in the past year and now account for 9 percent of retail purchases.
?You?re definitely seeing a major shift in spending,? said New York-based retail consultant Walter Loeb.
Benefiting from the shift are online merchants like Wayfair.com. The company, which sells products ranging from baby strollers to decorative pillows, reported sales topping $500 million last year.
?Shoppers are not spending with abandon,? said Steve Conine, chairman of Boston-based privately held Wayfair.com. ?But the shopping patterns are in our favor.?
The overall decline in retail sales reflects, in part, falling gas prices. But even excluding sales at gas stations, retail spending fell 0.3 percent from May to June.
As hiring has slumped, workers? pay has barely kept up with inflation. Consumers have responded by pulling back on their spending, which drives about 70 percent of economic activity.
?Weak jobs data have certainly done nothing to alter our view that consumer spending growth will be very modest at best in the quarters ahead,? said Joshua Shapiro, chief U.S. economist at MFR Inc.
The IMF lowered its outlook for global growth over the next two years in part because of Europe?s financial crisis and slower expansion in China and India.
The international lending organization predicts global growth of 3.5 percent this year, down from its forecast in April of 3.6 percent. It cut its forecast for 2013 to 3.9 percent growth from 4.1 percent.
The IMF also cut its forecast for U.S. growth to 2 percent this year and 2.3 percent next year, both slightly below its previous estimates.
The retail spending report showed that sales at auto dealers ? one of the economy?s strongest areas this year ? fell 0.6 percent from May to June. That?s a gloomier sign than earlier reports from U.S. automakers had suggested.
The automakers have reported that sales rose 22 percent in June from the same month in 2011. But the automakers don?t adjust their sales data for seasonal changes. And their figures reflect changes from the same month in the previous year, not from month to month.
The weakness in June retail sales extended well beyond autos. The Commerce report showed sales fell 0.7 percent at department stores and 1.6 percent at building supply stores. Sales at furniture stores and electronics and appliance stores both fell 0.8 percent.
Sales at gas stations dropped 1.8 percent after a 2 percent drop in May. The declines reflected cheaper gas, which has dropped more than 50 cents since early April.
The economy is expanding too slowly to lower the unemployment rate. Employers have created an average of just 75,000 jobs a month in the April-June quarter ? only about a third of the monthly job growth during the previous three months.
Source: http://lubbockonline.com/business/2012-07-16/economy-looks-weaker-retail-sales-slump
psychosis dianna agron million hoodie march tebow trade mike the situation jacksonville jaguars jacksonville jaguars
No comments:
Post a Comment