U.S. retail sector perks up
One month’s data may not a trend make. Even so, this morning’s batch was pretty solid. U.S. retail sales rose 1.1 percent in February, the biggest gain in five months, and January’s numbers were revised up. Some of the rise reflected higher gas prices, but much of it appeared to be real.
The National Federation of Independent Businesses’ small business optimism index also rose, for a sixth straight month.
Eric Green at TD Securities says that as far as potential revisions to GDP forecasts, he’s keeping his powder dry for now:
This will probably lead to some upward revision in the monthly consumption data that feeds into GDP, but at the margin. The main weakness in recent consumption data has not been in objects you buy, take home, or eat, but in services which is not captured in the retail sales data. We keep our GDP forecast of 1.7%, one already predicated on very strong gains in consumer spending for February and March.
Economists at Goldman Sachs, however, thought differently:
Economy signs: Better-than-expected means what?
Better-than-expected retail sales data eased recession fears today but not by much. The lukewarm reaction from many analysts doesn’t exactly paint a clear picture for the economy.
“I think the number is OK. Sentiment had gotten so negative that a more mediocre number like this isn’t terrible,” said James Dailey, portfolio manager for TEAM Asset Strategy Fund.
Retail sales data beat expectations but an analysis by Anooja Debnath and Emily Kaiser points out that even the expectation water-mark is not as clear as it once was. Economic forecasts are all over the map and the consensus forecast does not necessarily represent what most economists think.
Recent data has taken some pressure off the Fed but with an economy many are viewing as flat, talk of more monetary easing, and how to do it, is swirling.
Turning to the housing market, Barry Ritholtz at The Big Picture is predicting the worst in housing is likely over. Sure prices could fall another 33 percent — but it’s unlikely –because homes are now priced where they should be in today’s market, Ritholtz writes.
Barry Ritholtz at The Big Picture writes the worst is probably over for the housing market because prices have already fallen 33 percent from the peak. He said prices as of the end of the first quarter were 5-to-15 percent over fair value based on traditional metrics, so even a return to fair value would entail a smaller percentage decline. An earlier post misstated his view.
For a bolder dose of optimism, look to Warren Buffett.
Crouching Buyer, Hidden Bargain
The terrible U.S. retail sales racked up in December — called a “horror show” by ING — were all the more gruesome because of the sales on offer to customers in the run up to Christmas. Shops weren’t exactly giving things away, but their generosity knew few bounds.
Consider the experience of one visitor to a heaving handbag department in a Maryland Macy’s. Customer: “I would like to buy this handbag please. Oh dear, it appears to be the only one that is not on sale.” Salesman: “So it is. Tell you what, sir, I’ll give you 15 percent off anyway.”
Happy customer, happy new handbag recipient, unhappy sales figures.
Jack’s shoes
Florsheim mens shoes are reasonably classy. They were imortalised, for example, by snappily dressed Jack Nicholson in Roman Polanski’s “Chinatown“. He was rather distressed, film buffs will recall, by what a flood drainage canal did to them.
So it was something of a sign of the times last week that a visitor to a normally genteel Florsheim shoe shop in a Maryland mall got the hard sell from two salesman. Simply popping in to ask a question, our hero was essentially told — firmly — that he could not afford to leave without purchasing some footwear. The price was right, he was told.
No shoes were purchased, as it happens, but the pitch was nonetheless enlightening as a sign of desperation. The mall was relatively empty, despite cut down sales at nearly every shop. Very few people were buying, judging by the shopping bags. Sales staff everywhere looked pretty lonely.
Purely subjectively, but there were no signs at this particular mall of a seasonal spurt to spending in the world’s leading economy.
