the City Cafe
The next few weeks are extremely important to retail sales, a key indicator possibly signaling a recovery from the recession. The months of November and December are critical to for retail merchants, many retailers account for around 50% of their annual profit during this two month period. Last year retail sales declined by 3.4% during the months of November and December. The forecast for this year is around a 1% decline (which is around 20 to 30 billion less in sales from 2006 and 2007).
The latest ’stop light’ chart of Utah’s economic indicators, prepared by ULCT economist Doug Macdonald. A few indicators are starting to improve: residential construction is up 4.5% over the last three months and unemployment claims in the state of Utah are starting to slow.
Gross domestic product (GDP) is up for the third quarter of 2009. Not only is GDP up, but it is the largest increase in 8 quarters. So are we out of this recession? The economy is looking much better, but there are still some concerning issues, especially the high rate of unemployment (9.8% nationally). And one reason the 3rd quarter GDP is up 3.5% is due to the cash for clunkers program…there is still a lot of uncertainty about what this means for the 4th quarter.
Do monkeys follow the same principles of economics as humans? This is a great podcast from Planet Money, you can listen here: Economics for Monkeys.
A number of important national indicators will be released this week. Here is a quick summary:
- Retail sales are expected to be down -2.7 percent. 10/14
- Retail sales ex. Autos are expected to be down -0.3 percent. 10/14
- Business inventories are predicted to be down -1.2 percent. 10/14
- Initial employment claims are expected to be around 540K 10/15
- Consumer Price Index is predicted at 0.2 percent 10/15
- Core CPI (excluding food and energy) is expected at 0.1 percent. 10/15
We might be turning the corner on the recession. There are now a few indicators that have been positive for the last couple of months. However, consumer spending and retail sales have still been incredibly low. In fact, retail sales during this recession have been lower than any previous recession. Remarkably lower than the last two recessions (1990 and 2001).
Interesting chart in the New York Times yesterday illustrating the change in retail sales since 2003. Of course consumers are definitely spending less money, but not all retailers or sectors are being impacted equally. Not surprisingly motor vehicle sales has experienced the sharpest decline.
Every month Doug Macdonald, ULCT’’s economist, puts together a summary of key economic indicators for Utah. These indicators are summarized in this snapshot with either green (improving), yellow (stable), red (declining) lights. To no surprise the summary is still filled with a lot of red.
The Consumer Confidence Index, a good measure of how Americans perceive the country’s employment capability, dropped in September to 53.1 from 54.5 in August. The number still remains substantially higher than its 25.3 reading in February.
Gross Domestic Product which is a widely observed indicator due to the fact that it measures total output was down for the second quarter of 2009 by -.07 %. This number is more optimistic than the first quarter which was down -6.4%.
Personal Income rose .2% in August from July and the savings rate as a percentage of disposable personal income was 3 %.
Construction spending in August 2009 increased 0.8% from July but declined 11.6% from August 2008, to $941.9 billion.
Retail sales increased by 1.1% from July 2009 sales, excluding auto sales (excluding gas sales rose 0.6%). This is higher than the projected 0.4% increase. This is the highest increase in six months. The cash for clunkers program also generated a jump in auto sales — up nearly 12 percent from July.
