Here we go again. More signs that the economy has bottomed. The retail sector is rebounding. Auto sales are up. Existing home sales are WAY up. But what does the media do? Report that the up tick in the retail sector is “not sustainable” and probably won’t last long. More dower news to ensure the takeover by the federal government of our freedom in the form of “stimulus packages.”
People are against spending more money on a recession that doesn’t exist. The polls don’t lie. President Obama and the Congress are using a slight downturn in the economy to expand government and the media are willing accomplices. I was never a big believer in conspiracies but this “recession” has changed my mind. I am positive now that there is a conspiracy to take away our freedoms in America and the media is behind it. JD
Bloomberg article below.
By Bob Willis
Feb. 12 (Bloomberg) — Sales at U.S. retailers unexpectedly halted a six-month slide in January, an advance that may not be sustained after the number of Americans collecting jobless benefits reached the highest on record.
The 1 percent gain in purchases reflected higher gasoline prices and more spending on clothing and food, the Commerce Department said today in Washington. Excluding cars, the gain was 0.9 percent. The Labor Department reported that 4.8 million people are now collecting unemployment insurance.
An accelerating decline in the job market, along with a record destruction of household wealth with the slide in home values and stocks mean consumers are likely to resume cutbacks. Stocks tumbled on concern that President Barack Obama’s stimulus package will be insufficient to assure a swift economic recovery.
“We’re still in a slow bleed for retail sales,” said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York. While price discounts probably lured some consumers in January, “I don’t think it can be sustained.”
The Standard & Poor’s 500 Stock Index fell 1.3 percent to 823.11 at 12:06 p.m. in New York. Treasuries were little changed, with yields on benchmark 10-year notes at 2.77 percent. The dollar rose as concerns about the effectiveness of the stimulus and financial-rescue plan spurred demand for the U.S. currency as a haven. It advanced 0.6 percent to $1.2826.
A separate Commerce Department report today showed that inventories at U.S. businesses fell more than forecast in December as companies sought to dump their unsold goods. Inventories at factories, retailers and wholesalers dropped 1.3 percent. Sales declined 3.2 percent.
Retail sales were projected to fall 0.8 percent after an initially reported 2.7 percent drop the prior month, according to the median estimate of 72 economists in a Bloomberg News survey. Sales excluding automobiles were forecast to decrease 0.4 percent from the prior month, according to the survey median.
A “collapsing” job market means spending will deteriorate further, said Tom Porcelli, a senior economist at Castlestone Management Ltd. in New York. “There were enough post-holiday sales to lure people into the stores; the question is whether that is sustainable — and the answer is, obviously not.”
The U.S. unemployment rate will soar to 8.8 percent in the final three months of the year, from 7.6 percent last month, according to the median estimate in a monthly survey by Bloomberg that was released today.
More Job Cuts
This week, General Electric Co. said it will lay off 1,200 locomotive workers, US Airways Group Inc. said it would cut its airport staff and General Motors Corp. announced it will axe 10,000 salaried positions.
The retail figures aren’t adjusted for inflation, so price increases can influence the data. The average cost of a gallon of regular gasoline last month rose by 10 cents to $1.78 a gallon, according to AAA. Receipts at filling stations increased 2.6 percent in January, the first gain in six months, following a 16 percent decline in December.
Today’s report showed sales at automobile dealerships and parts stores rose 1.6 percent, the first gain since August, after decreasing 2 percent.
Still, demand for automobiles has crumbled as banks tighten lending standards and consumers hunker down. Sales plunged 55 percent at Chrysler LLC and sank 49 percent at General Motors Corp. last month as car loans became scarce after credit seized up late last year.
‘You Can’t Sell’
If consumers “can’t get credit, you can’t sell vehicles,” Mark LaNeve, GM’s sales chief, said in an interview Feb. 3. “This is what is choking us to death.”
Excluding autos, gasoline and building materials, the retail group the government uses to calculate gross domestic product figures for consumer spending, sales rose 1.2 percent in January, following a 1.7 percent decrease in December. The government uses data from other sources to calculate the contribution from the three categories excluded.
Sales also rose for electronics, appliances, clothing and food and beverages. Sales declined at building materials stores, furniture outlets and department stores.
Purchases at non-store retailers, which include online and catalog sales, rose 2.7 percent.
Retailers are nonetheless bracing for the first annual drop in sales in at least 14 years, according to the National Retail Federation. January same-store sales dropped 1.6 percent from a year ago, the International Council of Shopping Centers reported last week.
Consumer spending is set to contract again this quarter after falling in the second half of 2008, economists predict. Purchases haven’t declined for three consecutive three-month periods since records began in 1947.
The world’s largest economy may contract at a 5.5 percent annual pace this quarter after shrinking at a 3.8 percent rate in the last three months of 2008, according to a forecast by economists at Morgan Stanley in New York. Last quarter’s drop was the biggest since 1982.
The unemployment rate jumped to 7.6 percent in January, the highest level since 1992, the Labor Department said last week. Payrolls plunged by 598,000, bringing the total number of jobs lost over the last 13 months to 3.6 million.
Retailers are slashing staff as they forecast declining sales. Macy’s Inc., the second-largest U.S. department-store company, is eliminating 7,000 jobs after discounts of 60 percent failed to stem revenue declines during the worst holiday season in four decades.
“Reducing our workforce is an unfortunate outcome of the current economic environment,” Chief Executive Officer Terry Lundgren said in a statement last week.