Economy Watch: Shoppers Hit the Stores
- Dec 15, 2010
December 15, 2010
By Dees Stribling, Contributing Editor
American retailers were reportedly feeling good vibes from customers last month, and now retail sales numbers from November are backing up that feeling. According to the U.S. Department of Commerce, retail sales spiked upward by 0.8 percent in November compared with the previous month. Retail sales haven’t been this strong since 2007.
Gas stations benefited from rising prices–sales were up 4 percent in November for gas stations–but for other retail winners, growth was mainly organic, with inflation remaining quite low for most goods. Department stores saw a 2.8 percent month-over-month sales increase, while specialty clothing stores’ sale grew 2.7 percent in the same period. Sporting goods, hobby, book and music stores experienced 2.3 percent growth–electronic books haven’t quite killed off paper volumes, it seems.
Not every sector advanced between October and November, however. Car and car-part sales, after experiencing a strong summer, dropped 0.8 percent month-over-month. Furniture store sales lost 0.5 percent, and building materials and garden supply stores edged down 0.1 percent.
Fed Sticks to Its Guns
The Federal Reserve, brushing off criticism of QE2 and other measures it has taken lately to stimulate the economy, said on Tuesday that it was sticking to its game plan. Or rather, the Federal Open Market Committee said that every member except contrarian Thomas M. Hoenig voted to stay the course.
“To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November,” noted the formal statement, referring to QE2 and implicitly telling the Chinese and Germans and certain domestic critics to suck it up. “The Committee intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.”
The FOMC also let it be known that the target range for the federal funds rate will continue at a scant 0 percent to 0.25 percent. “Economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period,” the committee asserted.
Small-Business Owners More Optimistic, But Not Hiring Much Yet
The National Federation of Independent Business reported on Tuesday that its Index of Small Business Optimism gained 1.5 points to 93.2 in November. Not a bad uptick, but the index still remains in recessionary territory, according to the NFIB.
Only 9 percent of the roughly 4,000 small-business owners surveyed for the index reported unfilled job openings, down one point for the month and a pretty weak showing historically. Over the next three months, only 9 percent plan to increase employment and 12 percent say they will cut workers. Everyone else is standing pat when it comes to hiring in early 2011.
Wall Street was mostly positive on Tuesday after absorbing the positive retail numbers, but the markets flagged in the afternoon. Still, the Dow Jones Industrial Average ended up 47.98 points, or 0.42 percent. The S&P 500 gained only 0.09 percent and the Nasdaq eked out a 0.11 percent rise.