Featured Content

TRIPLE YOUR MONEY IN A MONTH!

TRIPLE YOUR MONEY IN A MONTH!

Still worried about the economy? Become an elite charter member of George's DAILY PROFITS and you could... TRIPLE YOUR MONEY IN A MONTH! George gave us the $2.8-billion IT infrastructure provider, up 4,745.20%; the $1.8-billion advertising agency, up 1,295.44%; and the $762 million business software company, up 1,213.19%. Only charter members can follow George daily. Learn how here!

U.S. Retailers’ Dwindling Fortunes a Signal of Economic Slowdown Ahead?

By

economic slowdownWhen retailers in the U.S. economy warn about their sales being in a slump or start to forecast rough roads ahead, it should be a warning to investors of an economic slowdown ahead. The logic behind this is very simple: Retailers in the U.S. economy show trends about consumer spending; if retailers are worried, it means consumer spending is in trouble.

One way to get an idea about bleak consumer spending is by looking at what happens during the peak buying seasons. In the most recent peak buying season, being the back-to-school shopping season, retailers in the U.S. economy were only able to lure in customers by slashing their already low prices.

The president of Retail Metrics (a company that provides estimates of same-store sales), Ken Perkin, said, “They [discounts] seem to be above the norm. That was emblematic of just the lack of demand for back-to-school.” (Source: “U.S. retailers rely on deep discounts to win back-to-school shoppers,” Reuters, September 5, 2013.)

In the very recent past, we have heard from retailers like Wal-Mart Stores, Inc. (NYSE/WMT) and Macy’s, Inc (NYSE/M) about how they are struggling with their sales. And that’s a problem when you have both low-end and higher-end retailers facing similar customer demand issues.

The Cato Corporation (NYSE/CATO) is an apparel and accessory chain founded in 1946. The company reported its same-store sales in August were down two percent compared to the same period a year ago. The CEO of the company, John Cato, said, “August same-store sales were within our range of expectations and consistent with our current trend. We remain cautious in regard to the remainder of the year.” (Source: “Cato Reports August Same-Store Sales Down 2%,” The Cato Corporation web site, September 5, 2013.)

While retailers face soft—and in some cases, declining—demand in consumer spending, I have another concern that doesn’t get much mainstream attention: how the pullback in consumer spending will impact the American jobs market.

Since the beginning of the so-called recovery, we have seen a spur in retail jobs. If we start to see retailers post poor sales because consumer spending is in a slump, jobs created in the low-paying sector will diminish as quickly as they were created.

It’s very simple: we can’t have economic growth in the U.S. economy until the average American Joe starts to spend. When he spends, it creates jobs and it keeps the economic cycle rolling. As I have mentioned many times in these pages, consumer spending makes up more than two-thirds of the U.S. gross domestic product (GDP)—that’s why it’s so important that consumers spend.

Retail stocks are a leading economic indicator. When I look at the retailers today, I see a declining trend in their prices. One of my favorite leading indicator retail stocks to watch is The Gap, Inc. (NYSE/GPS). Its stock price is down roughly 13% off its August highs—not good news at all for this sector.

Premium Content

Secret "New Swiss Bank Account" Safest Way to 44% Returns

Secret

It's the safest—but, until now, completely ignored—place for your money. Because these elite "bank accounts" pay guaranteed 5% cash payments per annum on top of returns on capital exceeding 44%... Learn all about them here.

About the Author, Browse Michael Lombardi's Articles

Michael Lombardi founded investor research firm Lombardi Publishing Corporation in 1986. Michael is also the founder and editor-in-chief of the popular daily e-letter, Profit Confidential, where readers get the benefit of Michael’s years of experience with the stock market, real estate, economic forecasting, precious metals, and various businesses. Michael believes in successful stock picking as an important wealth accumulation tool. Michael has authored more than thousands of articles on investment and money management and is the author of several successful... Read Full Bio »

Exclusive profit Confidential Presentation

Secret Retirement Plan Pays Up to $12,160 a Month?

Secret Retirement Plan Pays Up to $12,160 a Month?

A select group of Americans are retiring with a little-known retirement plan whose advertisement by its issuers is censored by Congress... Yet this plan enables Americans to potentially collect up to $12,160 in monthly income that's sponsored entirely by large-cap American companies. These secret Sponsored Retirement Plans are trumping social security by up to 10 times. And unlike mainstream retirement plans like 401(k)s or IRAs, SRPs are ideal for people who want to start with very little money. You could begin your SRP with as little as $10, $50, $100 or $400. To see real-life stories of folks who've built hundred-thousand-dollar portfolios thanks to SRPs and how to get your own plan started today, click here now!

×