Store Revenue Consistent, Consumer Confidence Wavers
Thursday, February 17th, 2011Retail revenue and consumer confidence are crucial economic indications carefully viewed by economists and investors. One would presume that retail revenue and consumer confidence would increase, or drop in tandem. A pair of reports defied those expectations Friday, showing strengthening store revenue in one and weakening consumer confidence within the other. This makes one wonder if all the payday cash loans they took out for the holidays were really worth it.
Seeing more sales in 2010 in retail
the Commerce Department explains that there was a greater increase in retail sales in the United States in 2010 than there has been since 1999. From 2009 to 2010, U.S. retail sales increased 6.8 %, the strongest growth since an 8.2 % surge in 1999. The sixth month in a row of retail sales going up was shown in December when it went up 0.6 % to $380.9 billion. In Nov. it had already increased 0.8 percent. Despite the holiday shopping season, December’s gain was less than expected, largely due to harsh winter weather. The steepest drop in 2 yrs happened with department store sales though. It went down 1.9 percent. There was a 2.9 percent boost of sales in the month though. This is why the month ended up gaining.
Index isn’t necessarily true for consumer confidence
There was an unexpected decline in January’s consumer confidence although there have been strong sales. The Thomson Reuters/University of Michigan consumer confidence index for January fell to 72.7 from 74.5 in Dec.. A Bloomberg News survey of economists predicted a bump in the consumer confidence index to 75.5. Gas an energy prices are going up which is what analysts blame. It is also as a result of the job creation being so slow though. The labor market won’t be able to recuperate for quite a while right now after unemployment fell to 9.4 % in Dec.. Sales at gas stations went up 1.6 % last month after there were higher gas prices. There was, in Dec., a 4.6 percent rise in energy prices too.
Data bode well for consumer spending
Consumer confidence has dropped so far this month, but economists say the consumer expectations index is a more accurate economic indicator. There is something else considered with the consumer expectations index. It looks at how many feel about six months within the future with their finances. The highest mark since last June is where the Commerce Department reports it is at as it is at 68.2. There is a good chance the consumer expectations index being so strong will help consumer spending a lot. This means the United States economy should improve. Seems like that the economy might recover just a little bit with the conflicting information that has been reported with the trend in sales.
Citations
Bloomberg
bloomberg.com/news/2011-01-14/u-s-consumer-confidence-unexpectedly-declines-on-jobless-rate-fuel-costs.html
Financial Times
ft.com/cms/s/0/31407e40-1fe7-11e0-b458-00144feab49a.html?ftcamp=rss#axzz1B1dxfKkv
Wall Street Journal
online.wsj.com/article/SB10001424052748703959104576081602659693450.html