The US Economy

Scrat -- It has nothing to do with politics! It's like my (Republican) financial advisor said, Don't read that stuff: they're just trying to sell you the market. So-o-o--o, you guys go right ahead!

And Scrat, you always dramatize dissent: "irrational hatred of Bush."

Here's another: Today's San Jose Mercury News Business Section has one headline on page 4C "Stocks edge higher despite downbeat retail sales."

Retail sales rise 0.6 percent in August as shoppers ease up after July buying binge
JEANNINE AVERSA, Associated Press Writer
Friday, September 12, 2003
©2003 Associated Press

(09-12) 14:17 PDT WASHINGTON (AP) --

After splurging in July, America's shoppers spent more modestly in August amid higher energy prices and job losses.

Sales at the nation's retailers rose by 0.6 percent last month, following a brisk 1.3 percent sales increase registered in July, the Commerce Department reported Friday.

Although August's sales performance was weaker than the 1.5 percent gain that economists were forecasting, analysts said consumers are still spending at a healthy pace and are keeping their wallets and pocketbooks sufficiently open to help along the economy's recovery.

"Consumer spending rose solidly in August, even if it was expected to be up even more than we saw," said Joel Naroff, president of Naroff Economic Advisors.

Excluding sales of automobiles, which can swing widely from month to month, sales at all other merchants rose by 0.7 percent in August -- close to economists' predictions for a 0.8 percent rise.

On Wall Street, stocks edged higher. The Dow Jones industrials gained 11.79 points to close at 9,471.55.

In a second report, higher costs for energy and food helped to boost wholesale prices 0.4 percent in August, following a tiny 0.1 percent increase in July, the Labor Department said.

Energy prices shot up 1.2 percent last month, mostly due to a 6.3 percent jump in gasoline prices. Food prices rose 0.7 percent last month, compared with a 0.2 percent dip in July. Higher energy and food prices can put a strain on some households' budgets, leaving them with less money to spend on other things, economists said.

Concerns about higher gasoline prices helped dampen consumer confidence in early September, economists said. The University of Michigan's index of consumer sentiment dipped to 88.2 in September from 89.3 in August, a preliminary reading showed.

Consumers, whose spending accounts for roughly two-thirds of all economic activity in the United States, have kept the economy going since the 2001 recession. And they will play an important role in determining the strength of the anticipated rebound in the second half of this year.

Some economists believe growth in the final six months of this year will clock in at a rate in the range of around 3.5 percent to just more than 4 percent. Others think it will be closer to a 5 percent pace. Either scenario would be better than the 2.3 percent growth rate seen in the first six months.

Against that backdrop, the Federal Reserve is likely to hold a key short-term interest rate at a 45-year low of 1 percent when it meets on Sept. 16, economists said.

Larger paychecks and other incentives coming from President Bush's third tax cut left people with extra money to spend and contributed to the brisk gain in retail sales in July, economists said. Because July's sales were so good, some economists believed that August's sales would have to show a bit of a slowdown.
Worries about jobs -- the economy lost 93,000 positions in August -- also played a role in less robust sales in August, economists said.

In August, sales of automobiles and parts rose 0.5 percent, down from a 2.4 percent advance in July. That puzzled some economists who noted that other reports showed that unit sales of automobiles in August were strong.

"The escalation of some incentives in July took away from some sales in August and there appears to be a pattern of more sales of moderately priced vehicles in August," Paul Taylor, chief economist at the National Automobile Dealers Association, said in trying to explain the government's figures.

Sales at gasoline stations rose 2.7 percent in August, reflecting higher prices at the pump. Excluding gasoline station sales, retail sales rose 0.5 percent.

At electronics and appliance stores, sales increased 1.4 percent last month, down from a 1.6 percent gain the previous month. Department store sales went up 0.4 percent last month, compared with a 1.2 percent increase in July

Sales at sporting goods, books, music and hobby stores increased 1.5 percent in August, a turnaround from July's 0.6 percent decline. At bars and restaurants, sales rose 1.4 percent, up from a 0.5 percent rise in July.

At clothing stores, sales fell 1.4 percent, reversing July's 1.2 percent gain.



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On the Net:
Retail sales: www.commerce.gov/

Producer Price Index:
http://www.bls.gov/ppi

©2003 Associated Press

U.S. Credit Card Debt Grows Slowly in July
NewsStand - Monday, September 08, 2003


AFX News Limited
WASHINGTON (AFX)

WASHINGTON (AFX) -- U.S. consumer debt grew at an annual pace of 4 percent in July, with almost all the gains coming from auto loans and other non-revolving debt, the Federal Reserve said Monday. Consumer debt grew $6 billion to $1.774 trillion in July after rising just $100 million in June, the Fed said. A month ago, the Fed estimated that credit fell $400 million in June. Revolving debt such as credit cards grew $300 million in July, or 0.5 percent annualized, after falling $1.3 billion in June, or 2.1 percent annualized. Non-revolving debt, such as auto loans or student loans, rose $5.7 billion in July, or 6.6 percent annualized, after rising $1.4 billion, or 1.6 percent, in June. The Fed's figures do not include mortgages and other loans secured by real estate. Economists figure the slowdown in consumer credit growth in recent months reflects massive refinancing and home equity loans in response to very low interest rates. Homeowners were able to pay down their credit card debt or borrow against their homes instead of taking out other loans. Over the past year, consumer debt has grown 3.3 percent, the slowest pace in 10 years. However, there's no evidence consumer spending has slowed. Retail sales are up 5.6 percent in the past year.