Why the October Retail Sales Number is Not Good News?
Jason Barlow Cunningham
November 19, 2009
A positive retail sales number was welcomed news on Wall Street on Monday. However, the retail sales number does not indicate that the U.S. consumer will spend freely in upcoming months.
Most economists expected positive sales growth in October. When the 1.4% rise in retail sales was announced, many people were excited by the headline number. Unfortunately, sales increased by 0.2% in October without auto sales.
There is no need to cheer about the retail sales number. It is just another sad reminder of the financial condition and psychology of the average U.S. consumer. Why spend more money with the constant threat of unemployment looming? In addition, many people just do not have the money to shop because businesses have eliminated overtime and bonuses for many employees.
Some economists do consider the October retail sales number to be a step in the right direction. Yet, no one has mentioned that the number is any indication of a booming economy for 2010. Fortunately, the economic data over the next few months should provide more guidance, regarding the future direction of the U.S. economy.
Nevertheless, the Holiday shopping season is quickly approaching. Retailers will attempt to lure would be consumers to their stores by offering discounts. In this economy, do retailers have much choice to generate traffic to their stores? Individuals are no longer in a hurry to use their credit cards.
If the October retail sales number is any indication of the Holiday shopping season, many retailers will be saying, "bah, humbug!" before January 2010. This could lead to further job cuts in 2010. Therefore, do not be alarmed if the unemployment rate continues to rise.
On a lighter note, the retail sales number helped the stock market to rise on Monday. The continued weakness of the U.S. dollar also contributed to the increase of the Dow Jones Industrial and S&P 500.
Most economists expected positive sales growth in October. When the 1.4% rise in retail sales was announced, many people were excited by the headline number. Unfortunately, sales increased by 0.2% in October without auto sales.
There is no need to cheer about the retail sales number. It is just another sad reminder of the financial condition and psychology of the average U.S. consumer. Why spend more money with the constant threat of unemployment looming? In addition, many people just do not have the money to shop because businesses have eliminated overtime and bonuses for many employees.
Some economists do consider the October retail sales number to be a step in the right direction. Yet, no one has mentioned that the number is any indication of a booming economy for 2010. Fortunately, the economic data over the next few months should provide more guidance, regarding the future direction of the U.S. economy.
Nevertheless, the Holiday shopping season is quickly approaching. Retailers will attempt to lure would be consumers to their stores by offering discounts. In this economy, do retailers have much choice to generate traffic to their stores? Individuals are no longer in a hurry to use their credit cards.
If the October retail sales number is any indication of the Holiday shopping season, many retailers will be saying, "bah, humbug!" before January 2010. This could lead to further job cuts in 2010. Therefore, do not be alarmed if the unemployment rate continues to rise.
On a lighter note, the retail sales number helped the stock market to rise on Monday. The continued weakness of the U.S. dollar also contributed to the increase of the Dow Jones Industrial and S&P 500.
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