John Whitefoot: For an economy that relies on consumer spending to fuel the vast majority of its economic growth, ongoing weak retail sector (NYSEARCA:XRT) sales and increased jobless claims cannot be part of the equation. But they are. And have been.
In January, U.S. retail sector sales fell by 0.4%—the most since June 2012. Economists had predicted that January’s retail sector sales would be unchanged in January after falling by a revised 0.1% in December. (Source: “Advance Monthly Sales for Retail and Food Services January 2014,” U.S. Census Bureau, web site, February 13, 2014.)
January retail sector sales, excluding automobiles, gasoline stations, and restaurants, showed the worst year-over-year growth since 2009. And with the harsh winter weather, January’s sales reflect the sometimes unpredictable, cyclical nature of our spending, from discretionary (e.g., cars) to non-discretionary (e.g., heating).
At the same time, more Americans filed applications for unemployment benefits for the week ended February 8. Jobless claims climbed by 8,000 to 339,000; the four-week moving average for new claims increased to 336,750 from 333,250. Many economists continue to blame the cold weather for both weak retail sector sales and increased jobless claims. (Source: “Unemployment Insurance Weekly Claims Report,” United States Department of Labor web site, February 13, 2014.)
Fortunately, there is a silver lining to all of this. They suggest we’ll start to see an acceleration in hiring and retail sector sales in the spring and summer seasons—meaning they have written off the entire first quarter of the year, a quarter most economists initially predicted would be bullish. Myself and the financial editors here at Daily Gains Letter, on the other hand, have been warning readers for months about the weak data underlying the U.S. economy and our bearish predictions are coming to fruition.
The fact of the matter is that the lackluster retail sector sales and jobless claims underline a persistently weak U.S. economy. Wages are flat and unemployment and underemployment remain high. More broadly, the U.S. manufacturing sector is weak, January auto sales stalled, and January housing numbers (pending, new, and existing) disappointed.
That means the disappointing first quarter could translate into an even more disappointing second quarter. And by disappointing, I mean that even if we see an improvement in overall February retail sector sales and jobs numbers, it’s not going to be enough to generate a significant improvement in personal income levels. Again, that’s bad news for a country that relies on consumer spending to generate growth.(...)Click here to continue reading the original ETFDailyNews.com article: Weak Retail Environment An Investment Opportunity In Cash-Based Businesses? [NCR Corporation, Diebold Incorporated]You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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