Friday, June 11, 2010

Anemic Retail Sales; Strength of Consumer Recovery Overstated

Economists never expect bad news. Once again they were surprised by weak economic reports, this time by poor retail sales. Bloomberg reports Retail Sales in U.S. Fall as Consumers Boost Savings http://www.bloomberg.com/apps/news?pid= ... rlP1ODTXk4

Sales at U.S. retailers unexpectedly dropped in May, signaling consumers boosted savings as employment slowed and stocks fell.

Purchases decreased 1.2 percent, the biggest drop since September 2009, following a 0.6 percent April gain that was larger than previously estimated, Commerce Department figures showed today in Washington. Demand plunged at building-material stores, reflecting the end of a government appliance rebate, and sales fell at auto dealers, in contrast to industry figures which showed a gain.

Companies reined in hiring last month, making it likely households will keep a lid on spending, which accounts for about 70 percent of the economy. Discounters Target Corp. and TJX Cos. were among merchants reporting gains in May sales, indicating households are looking for bargains to stretch out their paychecks.

“The strength of the consumer recovery was overstated,â€