Retail sales beat expectations; building sector a boom to economy

[TomCADem]

Source: Washington Post

Building-sector sales jumped 6.9 percent in April from the previous month, while other categories had only tepid gains or even slight declines. That pushed total retail sales up 0.4 percent in April, better than some economists had expected.

The thaw in consumer spending is a key component of any economic turnaround. After suffering shellshock for much of 2009, shoppers this year have begun replacing worn-out merchandise and splurging on discretionary purchases. April marks the seventh consecutive month of gains in retail sales.

"It's quite clear that consumers at least are not wondering whether the economy is still in recession and spending as if they are in recovery mode," said Craig Thomas, senior economist at PNC Financial Services.

In May, consumers also reported feeling slightly more optimistic, sending the University of Michigan/Reuters consumer sentiment index up to 73.3, from 72.2. That rise was mainly because of consumers' improved outlook for the future, though economists warned that tends to be volatile.


Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/05/14/AR2010051402146.html?hpid=topnews

[marmar]

1. The headline is much more optimistic than the story is.

nt

[Tarheel_Dem]

2. Could you elaborate? The trend is undeniably moving in a positive direction.

"Some of the things that we're seeing are blips that will change from month to month," said John Long, retail strategist with consulting firm Kurt Salmon Associations. "We have to continually reset our expectations."

That's the least optimistic thing I could find in the article. I'm not quite sure what you're expecting. Is it not good news that we're feeling better about the economy, and loosening our purse strings?

[fasttense]

3. The 1st sentence says it all.

"Building-sector sales jumped 6.9 percent in April from the previous month, while other categories had only tepid gains or even slight declines."

Building sector sales are up because of President Obama's tax breaks for buying houses (this will end soon). So you are seeing pent up demand and some future demand that would have boughten houses later and bought them now while they could get a tax break. Banks have been keeping houses out of the inventory pool trying to force prices up because they know these tax bargain shoppers are out there. If you look at the oncoming foreclosure numbers you will see a huge backlog of housing inventory coming our way. The housing sector can not carry the economy when so many people will be going into foreclosure in the next 6 months.

If you were to use only one sector to measure the health of the economy it would have to be consumer spending. And the 1st sentence indicates that other sectors, and the biggest sector, are not doing so well. True sentiment is up. But sentiment was doing just find the day before the crash too.

This is not a robust long term economic improvement. Things will fall again because nothing has altered the conditions which brought about the last collapse.

[ixion]

5. actually, that building is a 'boom' is disconcerting

given the fact that there are literally millions of unused houses available. I'm not willing to say that's indicative of health, but that it shows we're still not being honest about what caused the trouble in the first place.

[pokercat999]

6. Those purse strings may in large part be tied to the

mortgages that are NOT being paid! There are millions of mortgages that are from a few months to a couple of years behind in payments. Those unpaid monthly sums (those that are actually still available) are going into the economy in direct retail spending. It's no small amount and certainly enough to boost the retail numbers.

edited to add this from the article:

"The thaw in consumer spending is a key component of any economic turnaround. After suffering shellshock for much of 2009, shoppers this year have begun replacing worn-out merchandise and splurging on discretionary purchases. April marks the seventh consecutive month of gains in retail sales."

[Mari333]

4. gosh, Im hitting the Dollar Stores a lot

thats about it.

[independentpiney]

7. I spent about $1500 in the building sector in April

None of it was discretionary, a new well pump and materials to repair flooding damage in my basement. This month I'll be creating a sales boomlet in the auto parts sector. Neither 'splurge' indicates a rise in my consumer confidence.

[jpak]

8. What's that I hear - the Clap of Doom?

nope

:evilgrin: