Wednesday, July 14, 2004

It looks like it wasn't only Wal-Mart and Target that were taking it on the chin last month.
he United States economy hit a bump as retail sales fell an unexpected 1.1 percent last month, the Commerce Department reported today, apparently reflecting lower consumer confidence and higher energy prices. Economists said this could ease pressure on the Federal Reserve to raise interest rates.

The fall of 1.1 percent from May's figures reflects a decrease in spending at department stores and car and truck dealerships. Car and truck sales accounted for the largest part of the drop, falling 4.7 percent, and department stores fell 0.8 percent, as did restaurants.
Note especially the broad based decline: autos, department stores and restaurants all declined. This will surely end up cutting second quarter GDP down significantly. With April and May 2004 turning in the first and third largest trade deficits in history, one might just see the current account deficit as a % of GDP creep well under the 5% bar.

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