RETAIL SALES
Storeowners pleased
Sometimes, good news actually gets better.
Retail sales have been healthy recently. Cold weather in early January cleared the shelves of coats and gloves. The housing boom never seems to relent, and that moves everything from doormats to dishwashers.
Sales for January rose a larger-than-expected 0.9 percent, excluding the sluggish auto sector, and when February retail sales are announced on Thursday, some analysts say the results could be better.
“People will have taken advantage of very good prices in the stores,” said Kurt Barnard, president of Retail Forecasting. He said discounting was strong in February, and consumers responded.
Apparel could have done even better, Barnard said, except for one problem: “The sameness of the merchandise being offered. Go into any mall in the United States and you will find it very difficult to tell one store from another.”
Barnard expects designers to differentiate their products more vigorously this year, helping sales going forward.
As for home furnishing and household appliances, he said retailers have nothing to fear. He credits the strong market for new and existing homes for propping up sales.
“Every time a home changes hands or is occupied for the first time, thousands of dollars are spent redecorating, refurbishing.” he said, “including anything from a new shower curtain to a new roof.”
TRADE DEFICIT
Experts see no change
Sometimes, at least, the bad news doesn’t get worse.
The nation’s trade balance–really, the nation’s trade deficit–comes out Wednesday. Economists forecast that we imported $42 billion more than we exported in January, about the same as a month earlier.
“It can’t keep going on without some effect, and it is potentially inflationary,” said Alexander Paris, president of Barrington Research Associates.
The country’s trade imbalance causes the dollar to lose value relative to other currencies. The concern is that nations flush with dollars may sell them before they lose even more value. Since a large chunk of those dollars is held in Treasury securities, that would drive down bond prices and raise interest rates. When that happened in the 1970s, devastating inflation resulted.
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Paris isn’t sure the end of the world is nigh, however. A sinking dollar makes imports more expensive, he said, and makes American exports more competitive on world markets.
“People need our markets,” said Paris, who added that is likely to bring dollars home.
CONSUMER CONFIDENCE
Does index matter?
Sometimes, the news can be mostly disregarded.
On Friday, the University of Michigan survey of consumer sentiment will be made available to subscribers, who will instantly leak it to the media, which will make like it’s a big deal. If confidence falters, the theory goes, people stop buying and economic activity will soften.
However, Lee Price, the Economic Policy Institute’s chief of research, isn’t lining up for his copy of the report.
“Consumer confidence numbers themselves are not that meaningful,” Price said. “They tend to track changes in other variables like unemployment and inflation and income gains.”
So why all the public concern about the various measures of consumer confidence?
“People who aren’t economists pay so much attention to it, the data mavens feel they have to pay attention to it so they can talk about it,” Price said.
On Thursday, data that fall into the same category–initial claims for unemployment benefits–will be announced. The weekly number is highly volatile and often revised, and unless it shows a continuing trend–steadily rising or falling for months–economists don’t put much stock in it.