What Evils Did March’s Retail Sales Report Hide?
Gallup’s Economic Confidence Index is relatively stable, but well below year-ago levels; President Barack Obama’s job approval rating has inched up but remains woefully low by historic standards; and Americans remain wary of his ability to craft strong economic policy. Further, U.S. employers are steadily creating jobs, but over the past year average hourly earnings rose a less-than-stellar 2.1 percent, which is a very small increase by historical standards; and, consumers have indicated a greater preference saving than spending. This set of truths that encompasses the nation’s economic well-being and political satisfaction speak a great deal to the tenuous nature of the United States’ economic recovery. In fact, according to a recent Gallup poll, 55 percent of Americans believe the economic outlook is getting worse, while only 39 percent believe it is improving.
“Americans’ confidence in the economy has leveled off, showing little positive movement in 2014 after recovering in the latter half of 2013 from the government shutdown,” noted Gallup’s Justin McCarthy in the April 20 reading of the Economic Confidence Index. “While scores earlier in 2013 flirted with moving into positive territory, Americans so far this year are consistently negative on where the nation’s economy currently stands and whether it is likely to improve.” Of course, this is not to say confidence won’t improve in the weeks to come, but whether confidence improves depends both of greater job creation, wage growth, and strong leadership. For now, the economic recovery — which is hugely dependent on consumer spending — appears to be accelerating, but it remains susceptible to minor disruptions such as this year’s unusually cool winter.
Some economists have postulated that once the cooling effects of this winter’s harsh weather has completely worked its way out of the U.S. economy, consumer spending will gain momentum and perhaps even post its strongest annual growth in nearly a decade. The reason for this optimistic outlook is the combination of an improving job market, the release of pent-up consumer demand, and the easing of certain government policies. After the weaker growth recorded in December and January, retail sales numbers from the past two months have show the U.S. economy to be accelerating. In February, for the first time in three months retail sales increased on a month-over-month basis, rather than decreasing. Then in March, retail sales expanded by the largest percentage since September 2012 and exceeded November’s growth rate, which was the last month before the winter chill began. These strong two months have largely dispelled worries that low discretionary spending by consumers was a sign of additional structural problems with the U.S. economy.