Retail Sales Point To Worsening Stall In US Economic Recovery

Monday, July 16, 2012 10:27
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Retail Sales Point To Worsening Stall In US Economic Recovery

Tags: economic indicators | Economic Outlook | economy | U.S. economy

Retail sales are not setting the US economy on fire. They are a reflection of the woes of the US job market and their decline for the third month in a row in a far worse-than-anticipated drop signifies the economy is not likely to pick up momentum any time soon.

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Retail sales dropped .5% in June after declining .2% in May. The forecast by analysts was for a .2% rise. The survey results of 81 economists was all over the board, ranging from a decline of .4% to an increase of .5%.
 
On a more positive note, manufacturing in the New York region in July increased at a more rapid rate than in June. Its gauge on economic activity rose to 7.4 in July from 2.3 in June.
 
Industry reports also showed retail same-store sales increased at a slower pace in June. Same-store sales at Macy’s increased at 1.2% instead of the forecast 2.3%.
 
The economy seems to be swaying to the tunes heard from Europe and the inaction of the US Congress. Both factors are dripping on US business activity and consumer confidence. Long term factors such as the US debt burden and Europe’s failure to create a unified structure for managing errant debtor countries seem to be gaining impact on both the US and global economic front.
 
It’s only a matter of time before the economic cycle will be forced to correct as a result of failed preventive action by the US Congress or Europe’s financial leadership to do more than offer short-term fixes for long-term structural issues.
 
Whether the correction will come in the form of higher interest rates as Vanguard predicts or in a global recession--or some as yet unanticipated occurrance--is anybody's guess.

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