U.S. Retail Sales Unexpectedly Fall for Second Month (Update2)

[bemildred]

Damn, who could have predicted this?

May 13 (Bloomberg) -- Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating that rising unemployment is prompting consumers to boost their savings.

Is that an incoherent statement or what? People who lose their income boost their savings.

The 0.4 percent decrease followed a revised 1.3 percent drop in March that was larger than previously estimated, the Commerce Department said today in Washington. Excluding auto dealers, sales fell 0.5 percent.

Fewer jobs, falling home values and the biggest loss of household wealth on record may limit consumers’ ability to spend for years, analysts said. As long as the biggest part of the economy is constrained, any recovery from the worst recession in at least half a century is likely to be subdued.

“The second quarter is going to be tough,” Bill Cheney, chief economist at John Hancock Financial Services Inc. in Boston, said in a Bloomberg Television interview. “Consumers are losing their jobs, concerned about losing their jobs and losing wealth.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLqc3woGnzWE&refer=home

[lostnotforgotten]

1. Quoting Homer Simpson - Doh!

eom

[OhioChick]

2. "People who lose their income boost their savings"

:wtf: is that supposed to mean?

[county worker]

3. To economists the opposite of spending is saving. So if spending decreases then savings increase.

It doesn't matter whether an individual has any money because they are not talking about individuals. It is a macro idea.

[bemildred]

4. I thought he was just pasting propaganda memes together, but your explanation works. nt

[pinqy]

7. Not quite....

Income = Consumption + Savings + Investment. Ignoring investment, you're right that if spending decreases then savings increases, but ONLY if income doesn't change. If income goes down (aggregate or individual) then either consumption or savings or Both have to go down. And if income goes up, then either consumption or savings, or both can go up.

[bemildred]

8. Income is income.

Consumption + Savings + Investment == Outgo. Income and Outgo are not necessarily equal.

I was wrong in arguing that that sentence did not make sense. It just seemed weird to me that people would save more after losing their jobs. It seems more likely they are trying to pay down debt, and hence not spending the money on new stuff.

[county worker]

11. I was thinking that since they said that consumption had decreased and savings had increased than

income was constant. Also to some savings and investment fall under the same umbrella. So he could have said "income remained the same and consumption declined therefore saving and investment increased."

[Baby Snooks]

9. It means the other excuse wasn't working...

Usually it's consumers have no confidence in the economy. The reality is consumers no longer have the income to buy anything. And so now, to counter that reality, the excuse is everyone is saving their money instead. Or investing it I suppose.

Life in Washington. Totally and completely disconnected from the reality of life in America.

[bemildred]

12. Yes, I would have said "rising unemployment is forcing consumers to curtail their spending"

or something of the sort, which is more to the point.

[pinqy]

5. "rising unemployment is prompting consumers to boost their savings" means

people afraid of losing their income spend less and save more...not that people without jobs are saving more.

[northernlights]

6. unexpectedly?

Unemployment went up. Foreclosures went up. Credit is maxed out. Credit is cut. Home sales prices went down.

More people have no jobs and therefore NO MONEY TO SPEND.

More people are afraid of losing the jobs they have, so AREN'T SPENDING UNLESS THEY HAVE TO.

More people hours and/or pay cut, and therefore NO LEFTOVER MONEY TO SPEND.

More people are on the street, homeless, jobless and therefore have NO MONEY TO SPEND.

In what universe were retail sales expected to rise?

[Vidar]

10. How can jobless people lacking money be unexpected?