Posts Tagged ‘retail sales’
Finally, some good economic news is coming to the U.S. economy…
The U.S. Census Bureau has reported that retail and food services sales for the month of May, adjusted for seasonal effects, increased 0.6% from April and 4.3% from the same period a year ago.(Source: U.S. Census Bureau, June 13, 2013.) This is the first report I’ve seen in a long time that shows increasing consumer spending in the U.S. economy.
And the Thomson Reuters/University of Michigan Consumer Confidence Index for May showed consumer spending increasing as well. The index registered at 84.5 in May, improving from 76.4 in April. (Source: Bloomberg, May 31, 2013.) This was the highest level the index has been at since July of 2007.
While this is all good news, my concerns about the U.S. economy remain…
Since the financial crisis in the U.S. economy, the Federal Reserve has been increasing the size of its balance sheet (printing trillions of dollars in new money) and the U.S. government has been spending rigorously, all for the sake of spurring economic growth. Consumer spending in the U.S. economy makes up 70% of our gross domestic product (GDP); hence, it’s vitally important that consumer spending rises if we are to have a sustainable economic recovery.
As it stands, the Federal Reserve is still creating $85.0 billion a month in new money to purchase government bonds and mortgage-backed securities. This may be the biggest reason why economic numbers like May’s retail sales are looking better.
But the unemployment rate in the U.S. economy is still staggeringly high. According to the most recent jobs market report, there … Read More
Not so long ago, the Congressional Budget Office (CBO) said it expected the U.S. government to register a budget deficit in the current fiscal year of $642 billion.
But hold on a minute…
The budget deficit so far (as of May 31, 2013) has already hit $626.3 billion, and we still have four more months to go in the government’s current fiscal year!
Since the beginning of the U.S. government’s current fiscal year 2013, which began in October of last year, the government has posted a budget deficit in six out of the past eight months.
The Department of the Treasury just reported the U.S. government registered a budget deficit of $139 billion for the month of May. The federal government took in $197 billion and paid out $336 billion for the month. (Source: Department of the Treasury Financial Management Service, June 12, 2013.)
Comparing it to last year, May 2013’s budget deficit was 11% higher than that of May 2012.
The government has been raking in a budget deficit of over one trillion dollars in each of the last four years; and with four months still left in this fiscal year, it wouldn’t surprise me to see us register a fifth consecutive year of trillion-dollar-plus deficits, despite being repeatedly told by politicians that our budget deficit this year would come in under $800 billion.
This is troubling news; the more budget deficits the U.S. government registers, the more the national debt will increase, and the more the government will need to borrow to pay for expenses. It’s that simple.
Currently, our national debt stands at … Read More
We all know that consumer spending and the performance of the retail sector dictates the direction of economic renewal in the U.S. It’s quite simple—if consumers spend, the economy and the retail sector will grow.
Now, with home prices nationwide continuing to rise and the jobs creation picture showing signs of improvement (though it is still slogging along), the end result has been a rise in consumer spending, which has helped to drive the retail sector.
Spending on durable goods is a good indicator on how positive consumers are in the retail sector, as this spending is on nonessential goods. So when consumers spend on this group, you know there’s some confidence in the overall economy. In April, durable goods surged 3.3%, which was well above both the Briefing.com estimate calling for a 1.5% decline and the 5.9% decline in March. On an ex-transportation basis, durable goods increased 1.3%.
Retail sales edged up 0.1% in April, which was above both the Briefing.com estimate calling for a 10.7% drop and the 0.5% decline in March.
In May so far, 10 U.S. retail chains have reported, and the results have been good, with the key same-store sales surging up 3.9% versus the 3.7% estimate. (Source: Wahba, P., “Retailers’ sales rise in May, spending stays moderate,” Reuters, June 6, 2013.)
Results from the big-box stores continue to be healthy in the retail sector.
Market leader Costco Wholesale Corporation (NASDAQ/COST) reported sales growth of seven percent in May, while its key same-store sales increased by five percent.
A big surprise was delivered by American Apparel, Inc (NYSE/APP), which reported an impressive 10% surge in … Read More
The beginning of the year was excellent for small-cap stocks as the Russell 2000 led the way with a 12% advance in the first quarter, including a 6.2% move in January.
We have been seeing some flight to safety in the risk preference of investors.
April has seen some profit-taking emerging in small-caps, as the Russell 2000 is down 2.3% as of Tuesday’s close and is currently trailing the blue chips and the S&P 500. (Read “Investors Down-Shift Risk, Search for Safety Ongoing Theme for 2013.”)
And with the economy continuing to strengthen in housing, manufacturing, and retail sales, small-caps will continue to have good upside potential.
The chart of the Russell 2000 below shows the upward break from the bullish ascending triangle. There’s some stalling and some potential for a relapse to back below 900, based on my technical analysis.
Chart courtesy of www.StockCharts.com
As we move forward, a lot of what happens to small-caps will be dependent on the ongoing strength of the economic recovery.
The key to investing in small-cap stocks is diversification and risk management.
Simply the risk is much higher when buying small-cap stocks. For instance, the emergence of bad news could drive small-cap stocks down 40%, while for a large-cap such a The Procter & Gamble Company (NYSE/PG), we would likely only see a decline of a few percentage points.
You should be sure to never load up on a sector and diversify across market caps and risk instead. In this way, you can achieve … Read More
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