Here’s Why Retail Sales Can’t Pick Up Steam
Retail sales in March were held back by the scant progress made in the labor market over the same period. Combined with little growth in wages, Americans found it difficult to spend, which is a concern for economists, as consumer spending accounts for approximately 70 percent of the economy. The previous two months of the year showed that retail sales were poised to extend the gains they made at the end of 2012, and consumer confidence levels have seemed to make a similar indication. However, recent reports from the International Council of Shopping Centers and Redbook have shown some weakness.
The sector did received two pieces of good news at the end of last week.
While March served up another heaping pile of disappointing jobs data on Friday morning, consumer sentiment appears to indicate that Americans still have confidence that the economic recovery will continue to chug forward at a modest pace. On Thursday, Bloomberg reported that its measure of consumer comfort closed out the first quarter of 2013 at its second highest level since 2008 and the Federal Reserve announced Friday that borrowing by U.S. consumers jumped as well.
Both the International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index and Redbook’s weekly measure of sales at chain stores, discounters, and department stores showed hefty gains in last week’ reading as well — bucking March’s trend for stagnating retail sales. But from this week’s look at the data, it seems that economic conditions could not change the trend in retail sales over the long term, at least not yet…