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June Retail Sales Increase, But Remain Weak
Printer-friendly versionOn Thursday, the U.S. Commerce Department released figures that showed retail and food service sales in June rose by 0.1 percent from the previous month, to $387.79 billion. Although the increase surprised economists, it was still “further evidence of the reluctance of consumers to spend,” said the Wall Street Journal’s MarketWatch.
In May, sales had declined by 0.1 percent, and economists had predicted a 0.2 percent decrease in June.
“The weak performance in retail sales over the past two months was troubling because the report is an important indicator of the economy’s big engine of growth, consumer spending,” reported MarketWatch, which noted that in a sign of wariness, consumers boosted their rate of saving in May.
The latest data showed sales were down in a number of categories, including those related to housing and furniture; electronic and appliance stores; restaurants and bars; and health care stores and sporting goods, hobby, book and music stores.
Categories that saw an increase in spending in June included food and beverage sales; building and garden supplies; and clothing and general merchandise stores.
The lack of spending by consumers is a reflection of their continuing worries about their financial security, as prices for gas, oil, and food have risen, and the unemployment rate reached 9.2 percent, according to data released by the Department of Labor on Friday, July 8. At the same time, the Dow Jones Industrial Average, the S&P index of 500 stocks, and the NASDAQ are all well up on the year — by 9.3 percent, 6.8 percent, and 7.8 percent, respectively.
“As corporate America starts to report second-quarter earnings this week, the divide between Wall Street and Main Street is clearer than ever,” The Street reported on Monday. “Companies boosted profit margins this year to a historical peak, in part, by refusing to hire even as orders and sales were robust.”
“There is lot of income generated in the U.S. right now, but less of it going to workers,” said Bill Cheney, chief economist at John Hancock Financial Services in Boston. “It’s not really Wall Street versus Main Street, so much as rich versus poor. I think that is the issue and it is characteristic of an economy where unemployment is too high.”
“You’ve got a consumer who’s hobbled,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, as reported by Bloomberg News. “The soft patch is still there. The underlying trend is toward very modest growth.”
The employment data show a very clear divergence between the two economies, according to a recent Business Insider report, which includes graphic representation of the job growth contributions and large company earnings.
Last Friday’s jobs report was in conflict with many economists’ predictions of stronger job creation, according to the Washington Post,and the dismal report spurred a debate in Washington over how to stimulate the economy and boost hiring, while cutting federal spending at the same time.
“Our economy as a whole just isn’t producing nearly enough jobs for everybody who is looking,” President Obama acknowledged in a speech in the White House Rose Garden.
“The growing global debt fears sent ripples from Wall Street to Main Street,” reported Gather on Monday, as negotiations to raise the debt ceiling reached a standstill and lawmakers failed to reach consensus over how to cut down the nation’s spending.