Slowing Sales Imperil Growth [wholesale jeans]
Americans, weighed down by the shaky recovery and feeble job market, are spending more cautiously now than earlier in the year, endangering prospects for economic growth.
Retail sales—of everything from restaurant meals to clothes and cars—clicked up 0.1% in June after falling slightly the month before, the Commerce Department said Thursday.
Earlier this year, sales were notching monthly gains of 0.8% or more—not a gangbusters pace, but far stronger than now. Consumer spending accounts for about two-thirds of demand in the U.S. economy, making expansion difficult when consumers are subdued.
This fall will provide a pivotal gauge of consumer health. Many retailers plan price increases—or are already phasing them in—to offset the rising cost of raw materials and wage increases in manufacturing centers such as China. Retailers have been testing higher prices on certain items this summer, with across-the-board increases expected to hit stores in coming weeks.
The latest retail-sales report is undermining the view among economists that growth will accelerate to around 3% in the second half of the year. Morgan Stanley trimmed its estimate for third-quarter growth to 2.8% from 3%.
Federal Reserve Chairman Ben Bernanke, testifying before Congress this week, said much of the economy's recent sluggishness can be attributed to a consumer slowdown, noting that the public's willingness and ability to spend will be key to the pace of growth over the next several months.
The chairman's point was echoed by Kevin Lansing, a senior economist at the Federal Reserve Bank of San Francisco. "Consumers are not going to be the driving force of economic growth," Mr. Lansing said, "And without that, the economy is going to be hard-pressed to put up growth rates of greater than 3%—which is what people were hoping for."
One factor weighing on consumers is the job outlook: The government reported last week that the U.S. added only 18,000 jobs in June while the unemployment rate rose slightly to 9.2%. A bright spot, however, is unemployment claims, which fell 22,000 to 405,000 last week. That number is still elevated but has been trending down in recent weeks.
Americans also are continuing to pare their debts, in part by walking away from mortgages and by not taking out new loans. Household debt, now 119% of annual after-tax income, is down from its 135% peak seen in the third quarter of 2007. But during the 1990s, the debt-to-income ratio averaged 89%.
Retailers' efforts to court a cautious consumer were evident this week at the Stamford Town Center in Stamford, Conn., where stores selling a host of goods from high-end chocolate to blue jeans are tattooed with signs hawking discounts. Two separate deals were on offer at the children's clothing store where Glenn Price was buying jeans for his 11-year-old son's trip to sleep-away camp.
"We're more reluctant to spend," said Mr. Price, director of business services for a company that makes high-tech spouts and other technology that help bars keep track of inventory.
Mr. Price says his family is spending more than during the dark days of the recent recession and its immediate aftermath. Last year, for instance, his son went to a much cheaper day camp. Yet two years into the recovery, the family still limits meals out, and searches for shopping bargains even as gas prices ease from the high levels earlier in the summer.
Not everyone is cutting back, with many retailers saying they see a bifurcation in shopping patterns, where lower-income consumers remain pinched but more-affluent shoppers accelerate spending. At luxury department -store chain Saks Inc., same-store sales rose nearly 12% last month, while Nordstrom Inc. reported a 7.9% increase.
Overall chain-store sales, which skew heavily toward apparel retailers and don't include Wal-Mart Stores Inc., the world's largest retailer, showed an increase of 6.5% in June, according to an index from Thomson Reuters. Yet sales and profits are slumping in the so-called dollar-store category, whose customers have been hit harder by the weak job market.
Retail sales—of everything from restaurant meals to clothes and cars—clicked up 0.1% in June after falling slightly the month before, the Commerce Department said Thursday.
Earlier this year, sales were notching monthly gains of 0.8% or more—not a gangbusters pace, but far stronger than now. Consumer spending accounts for about two-thirds of demand in the U.S. economy, making expansion difficult when consumers are subdued.
This fall will provide a pivotal gauge of consumer health. Many retailers plan price increases—or are already phasing them in—to offset the rising cost of raw materials and wage increases in manufacturing centers such as China. Retailers have been testing higher prices on certain items this summer, with across-the-board increases expected to hit stores in coming weeks.
The latest retail-sales report is undermining the view among economists that growth will accelerate to around 3% in the second half of the year. Morgan Stanley trimmed its estimate for third-quarter growth to 2.8% from 3%.
Federal Reserve Chairman Ben Bernanke, testifying before Congress this week, said much of the economy's recent sluggishness can be attributed to a consumer slowdown, noting that the public's willingness and ability to spend will be key to the pace of growth over the next several months.
The chairman's point was echoed by Kevin Lansing, a senior economist at the Federal Reserve Bank of San Francisco. "Consumers are not going to be the driving force of economic growth," Mr. Lansing said, "And without that, the economy is going to be hard-pressed to put up growth rates of greater than 3%—which is what people were hoping for."
One factor weighing on consumers is the job outlook: The government reported last week that the U.S. added only 18,000 jobs in June while the unemployment rate rose slightly to 9.2%. A bright spot, however, is unemployment claims, which fell 22,000 to 405,000 last week. That number is still elevated but has been trending down in recent weeks.
Americans also are continuing to pare their debts, in part by walking away from mortgages and by not taking out new loans. Household debt, now 119% of annual after-tax income, is down from its 135% peak seen in the third quarter of 2007. But during the 1990s, the debt-to-income ratio averaged 89%.
Retailers' efforts to court a cautious consumer were evident this week at the Stamford Town Center in Stamford, Conn., where stores selling a host of goods from high-end chocolate to blue jeans are tattooed with signs hawking discounts. Two separate deals were on offer at the children's clothing store where Glenn Price was buying jeans for his 11-year-old son's trip to sleep-away camp.
"We're more reluctant to spend," said Mr. Price, director of business services for a company that makes high-tech spouts and other technology that help bars keep track of inventory.
Mr. Price says his family is spending more than during the dark days of the recent recession and its immediate aftermath. Last year, for instance, his son went to a much cheaper day camp. Yet two years into the recovery, the family still limits meals out, and searches for shopping bargains even as gas prices ease from the high levels earlier in the summer.
Not everyone is cutting back, with many retailers saying they see a bifurcation in shopping patterns, where lower-income consumers remain pinched but more-affluent shoppers accelerate spending. At luxury department -store chain Saks Inc., same-store sales rose nearly 12% last month, while Nordstrom Inc. reported a 7.9% increase.
Overall chain-store sales, which skew heavily toward apparel retailers and don't include Wal-Mart Stores Inc., the world's largest retailer, showed an increase of 6.5% in June, according to an index from Thomson Reuters. Yet sales and profits are slumping in the so-called dollar-store category, whose customers have been hit harder by the weak job market.
タグ：job market
2011-07-15 10:14
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