Retail sales, excluding automobiles, was flat in January. Minimal gains in gas stations (1.5%), building materials (1.4%), and grocery stores (.4%) were offset by drops in department stores (-1.5%), sporting goods (-.14%) and clothing (.9%). And in a 2.1% drop in auto and parts sales, and January retail sales were down .4%. This comes after a .1% drop in December (including auto sales), and a soft holiday spending season. This persistent weakness is not just because of snowstorms across most of the U.S.
Of greatest concern is the .6% drop in online sales. Bad weather can keep people away from the stores, but you'd think they would shop online instead. Didn't happen. You can't really blame the government, which closed down the economy in October, because they're actually passing the budget and raising the debt limit (as they should). (Source: U.S. Census Department, U.S. Retail Sales, February 13, 2014)
So, what's going on? First, consumers maxed out their credit cards in December. They now owe more than at any time since the recession.
Second, the job market is still not robust. Fewer jobs are being created than needed to keep the economy humming. To consumers, this translates to lower confidence.
These two indicators result from the ongoing drag created by income inequality, which has worsened since the recession. TIn 2012, the top 1% took more than 1/5 of total U.S. income, one of the highest levels on record since 1913. I've nothing against the rich, but they aren't spending enough. Instead, they're investing in the stock market, currencies and bonds. That's great for the stock market, but doesn't help the real economy.
How It Affects You
As retail sales continue to falter, businesses will lower prices to try and get more customers. That's great, until they start cutting staff to maintain margins. You can easily see where this is heading -- a deflationary downward spiral.
via:http://useconomy.about.com/b/2014/02/13/why-you-cant-blame-the-weather-for-weak-retail-sales.htm
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