Bloomberg reports that retail sales showed a "surprising" 0.1% decrease in sales. This was the first drop in three months. In came as a suprise to economist who had been expect an overall increase partly because of a boost in auto sales because of the cash for clunkers program. Unfortunately, sales overall were down.
Purchases decreased 0.1 percent, the first drop in three months, as shrinking demand at department stores such as Macy’s Inc. and Wal-Mart Stores Inc. overshadowed a boost from the cash-for-clunkers automobile incentive program, Commerce Department figures showed today in Washington.
A separate government report today showed more Americans than forecast filed claims for unemployment insurance last week, underscoring the threat to spending from the continued deterioration in the job market. Treasury securities jumped and the dollar fell after the reports, and some economists lowered estimates for growth this quarter.
“Until we start seeing job growth, consumers are still going to be very cautious,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto, which accurately forecast the drop in purchases excluding automobiles. “It’s premature to talk about the sustainability of a recovery,” he said, until there’s “follow-through on the demand side.”
This really shouldn't be a suprise. The July jobs report showed the economy lost 247,000 jobs last month. It may have been the smallest number of monthly job losses since last August but saying the economy "just" lost 247,000 jobs is ridiculous. Losing 247,000 jobs in a month is not a good thing. It means more people out of work and more people unwilling or less willing to purchase goods and services. Credit card companies are also tightening up which is also making it more difficult for consumers to make purchases.
