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Retail Sales Numbers Sway

Posted By admin || 12-Mar-2009

According to an article in the Dallas Morning News, retail sales fell in February by 0.1 percent, less severe than the 0.5 percent drop predicted by analysts. Although the government revised January's retail sales performance by reporting a 1.8 percent increase in sales, many analysts do not expect a sustained rebound in retail sales.

The article said:

"Consumers are fighting a good fight, but with such a terrible job market it is tough to imagine how long they can keep it going," Jennifer Lee, an economist at BMO Capital Markets said.

Consumers are tapped out, that's the true story. The retail boom that so many companies depended on was fueled by the easy availability of credit and jobs to pay on that credit; right now we're missing both. As foreclosures , loan defaults and job losses have increased many creditors are pulling back. American Express is even paying some of its "riskier" customers to close their credit card accounts. How many credit card companies do you know that want you to close your account? Why is American Express taking this action, they anticipate more job losses which means that some of its customers will not be able to repay their debts and they will default. Ordinary consumers are also anticipating more job losses because they see their friends and family experiencing job losses everyday. These consumers anticipating job losses are not easily giving up their credit lines nor are they going on shopping sprees, they are holding onto their cash. So the cycle of contraction continues.

Categories: Economy
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