Anyone who has listened to Diane Sawyer and other liberal drum pounders painting a rosy picture of the recovering economy and job growth needs to read the following:
US retail sales fail to hit forecasts
By Shannon Bond in New York
US retail sales rose less than expected over the holidays while new jobless claims climbed to a six-week high, underlining the slow pace of recovery from recession.
Retail sales increased 0.1 per cent in December to $400.6bn, missing forecasts of a 0.3 per cent rise and logging the weakest growth since last May, according to a commerce department report.
Separately, first-time claims for unemployment benefits rose to 399,000. Economists say claims need to stay below 400,000 to sustain job growth.
December sales of electronics and appliances fell 3.9 per cent and department store purchases slipped 0.2 per cent. Meanwhile, cheaper fuel prices brought down receipts at petrol stations 1.6 per cent last month, while food and beverage sales fell 0.2 per cent.
“December’s retail sales figures suggest it was not a happy holiday season for US retailers,” said Paul Dales, senior US economist at Capital Economics. “In other words, households have started to pare back their spending, most probably because their real incomes have continued to fall.”
An upward revision to November’s sales reading, from 0.2 per cent to 0.4 per cent, suggested that consumers did most of their holiday shopping early in the season.
“While there were several media reports suggesting holiday shopping was solid, [year-on-year] growth in chain store data did disappoint, and this data suggests the consumer, restrained by weak income growth, has lost some momentum outside autos,” said David Sloan, an economist at IFR Economics.
Steep discounts and extended hours at many retailers lured last-minute shoppers to stores in the week leading up to Christmas, but the 2011 holiday season was seen as modest overall and many companies have downgraded profit forecasts.
Thursday’s commerce department figures showed that December’s declines were offset by stronger demand for cars; sales of motor vehicles and parts were up 1.5 per cent, as indicated earlier this month by carmakers, who said December sales reached about 13.7m at a seasonally adjusted annual rate.
Stripping out autos, overall retail sales fell 0.2 per cent compared with an expected 0.3 per cent gain. Sales excluding autos and petrol were flat in December.
Mild weather across much of the country also helped lift sales of building materials, which added 1.6 per cent over the month.
A separate report from the labour department showed initial jobless claims reversed recent declines, climbing by 24,000 to 399,000 in the week ending January 7. That was the highest level in six weeks and lifted the four-week moving average to 381,750.
The jump in claims suggested that the job market remains volatile as companies look to contain costs. Unemployment has fallen in recent months, with last week’s report on December payrolls showing the jobless rate dropping to a near-three-year low of 8.5 per cent. But the decline was in part due to many discouraged Americans staying out of the labour force, while job creation remains too low to spur stronger declines in unemployment.
Seasonal hiring was also a factor in last week’s rise in jobless claims, said Jill Brown, vice-president of economics at Credit Suisse.
“We believe this was due to a surge in seasonal lay-offs similar to the first week of 2011. December temporary hiring for the holiday season, especially by shipping companies, has become more concentrated, so January seasonal firing after the holiday season has become a bigger swing factor,” she said.