Retail Sales Miss Their Target

By Author: Ryans Scott
Total Articles: 1
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With gasoline prices down, the revenue from the pump also went does to match the general economic outlook on crude oil futures. The commerce department report also pointed out a rather worrisome fact; the building sector was also sagging. This is not only disturbing but also disastrous as it contributed to the retail sales slipping 0.2 percent. It may seem ironical but the reality is that motor vehicle sales went up by 0.8% while automobile manufacturers reported a drop in the automobile units sold. If motor vehicle sales are to be taken out of the picture, the retail sales will have fallen 0.4% which is significant because retail sales have not fallen this lower taking the past couple of years into perspective. The questions that experts ask is whether this slowing trend will persist or it’s just a temporal stance. FALLING GENERAL DEMAND The producer price index (PPI) is a major determinant when it comes to demand of commodities. When it rises, this means that the demand is picking up however if it falls then the reverse hold true; the demand is slumping. The Labor Department reported a drop of 0.1% in this index even as ...
... energy costs fell by 4.3%. Wholesale prices however rose by 0.2% although this rise does not factor in food and energy. A number of factors have been touted as the likely causes of this weakening demand. Chief among the factors is the Eurozone financial mess. As Europe forms one of the major consumer blocks, a fall in its purchasing power occasioned by a worsening debt crisis and the institution of austerity measures. Gauging from the data coming form unemployment benefits claims, the labor market is not looking any healthier. This slackening job growth has had adverse effects on the consumer demand. Americans have been enjoying lower tax rates for quite some time but their future tax dispensation lies in the hands of the congress. Whether the Congress will manage to successful defend the case for continued enjoyment of the various lower tax rates is yet to be seen. The outcome will have a strong bearing on both business and consumer confidence. There are several expectations that people have as solutions to the slackening economy. There are those who are banking on the Fed to influence the monetary policy while others are looking towards the extension of bond maturities by the government in a bid to lower the long term borrowing costs. With the presidential elections around the corner, the darkening picture of retail sales will haunt the current government. The retail sales numbers coupled with the job market statistics challenge the key pillars upon which the current government policies stand. Businesses have been accumulating inventories a practice which has led to many analysts revising their estimates for the next quarter. An example is JP Morgan which has already cut its forecasts by 0.05% to settle at 2%. Excluding autos, building materials and gasoline, the retail sales tick up by 0.1% which makes it resemble the April data. The growth in retail sales therefore will need concerted efforts from all parties private and public alike. If any realizable gains are to be made, businesses will need to sell more while consumers will need to up their spending.

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