With consumer spending being as massive a part of the economy as it is — more than two-thirds of all economic activity — there's always much attention paid to monthly retail sales figures which major retailers report the first Thursday of every month.
So that retail sales for June rose more than analysts had predicted certainly seems like good news at first blush.
But happy days are definitely not here again based on a closer reading of the data. Some of those sales are being credited to consumers hitting air conditioned malls as they tried to beat the heat in June.
And some retailers like the Gap and TJX Co. had lower sales than retail analysts had forecast.
Meanwhile, many of the sales were driven by discounting and promotions which typically reduce retailer profits or even produce losses.
A snippet from Bloomberg News:
“Department stores benefited toward the end of the month from the excess heat across the country, particularly in the northeast but also out west,” said Ken Perkins, president of Retail Metrics. “Results were clearly mixed, and there was selective buying going on.”
July results may be similar, Perkins said, citing increased clearance sales in the first half and more hot weather across the U.S. While more people visited shopping centers, some of that traffic failed to translate into purchases, leading more than half of retailers to miss projections, Swampscott, Massachusetts-based Retail Metrics said.
On the jobs front, the Labor Department reported that weekly jobless unemployment insurance claims fell by 21,000 to 454,000, a bigger drop than economists had expected.
But while analysts welcomed the news that the weekly number for jobless insurance claims came in better than their forecasts, the overall number of claims filed was still troublingly large, and another sign that the economy's gears continue to slip.
Heidi Shierholz of the Economic Policy Institute offered this analysis:
In December of 2007, the start of the recession, weekly jobless claims were in the mid-300,000 range. As the job crisis worsened, weekly jobless claims rose sharply, peaking at 651,000 in March of 2009. Although the number of weekly jobless claims started to decline after that point, it has been stuck in a range of 440,000 to 480,000 for 19 weeks, with 454,000 new jobless claims in the week ended July 3. Although the official unemployment rate has edged down recently, that improvement is largely due to discouraged workers dropping out of the work force altogether. The country is emerging from the weakest downturn in seven decades but the recovery is excruciatingly slow. The pace of job creation in recent months, while a dramatic improvement over last year’s job losses, is not nearly sufficient to put America’s 14.6 million unemployed workers back to work in the foreseeable future.