Archive for the ‘retail’ Category

Retail sales fall by record amount in October

November 14, 2008

Retail sales plunged by the largest amount on record in October as the financial crisis and the slumping economy caused consumers to sharply cut back on their spending.

The Commerce Department said Friday that retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year.

By MARTIN CRUTSINGER, AP Economics Writer

The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.

The 2.8 percent drop marked the fourth consecutive monthly decline in retail sales and was much bigger than the 2 percent fall economists expected.

The weakness was led by a 5.5 percent plunge in auto sales, the biggest drop since August 2005. Auto companies reported unit sales fell to the lowest level in 17 years as potential buyers, frightened by all the turmoil on Wall Street, stayed away from auto showrooms.

Excluding autos, retail sales fell by 2.2 percent, also a record decline, underscoring the widespread weakness last month.

Consumer spending accounts for two-thirds of total economic activity and weakness in this area was the major factor dragging down overall economic growth in the July-September quarter. The gross domestic product fell 0.3 percent at an annual rate during the third quarter, the strongest signal yet that the country has fallen into a recession.

Many economists believe the GDP will drop by an even bigger amount in the current October-December period and will continue falling through the first two quarters of next year. They are expecting that the financial crisis, the worst in seven decades, will produce the country’s worst recession since the 1981-1982 downturn.

The government reported last week that the unemployment rate shot up to 6.5 percent in October, and many economists believe it will top 8 percent before the economy starts to mount a sustained rebound.

The retail sales report showed that sales at general merchandise stores, the category that includes big chains such as Wal-Mart Stores Inc. and department stores, fell by 0.4 percent, while sales at specialty clothing stores were down a bigger 1.4 percent.

Sales at furniture stores dropped by 2.5 percent, with sales at appliance stores and sport goods stores also showing declines.

One of the few areas to show an increase was the category that includes restaurants and bars which posted a small 0.3 percent gain, perhaps reflecting the desire of some to seek solace during turbulent economic times.

Jobless ranks hit 10 million, most in 25 years

November 8, 2008

The nation’s jobless ranks zoomed past 10 million last month, the most in a quarter-century, as piles of pink slips shut factory gates and office doors to 240,000 more Americans with the holidays nearing. Politicians and economists agreed on a painful bottom line: It’s only going to get worse.

The unemployment rate soared to a 14-year high of 6.5 percent, the government said Friday, up from 6.1 percent just a month earlier. And there was more grim news from U.S. automakers: Ford Motor Co. and General Motors Corp., American giants struggling to survive, each reported big losses and figured to be announcing even more job cuts before long.

Regulators, meanwhile, shut down Houston-based Franklin Bank and Security Pacific Bank in Los Angeles on Friday, bringing the number of failures of federally insured banks this year to 19.

By JEANNINE AVERSA, AP Economics Writer

The Federal Deposit Insurance Corp. was appointed receiver of Franklin Bank, which had $5.1 billion in assets and $3.7 billion in deposits as of Sept. 30, and of Security Pacific Bank, with $561.1 million in assets and $450.1 million in deposits as of Oct. 17.

Barack Obama, in his first news conference as president-elect, said the nation was facing the economic challenge of a lifetime but expressed confidence he could deal with it.

“Immediately after I become president, I’m going to confront this economic crisis head on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity,” he said after meeting with economic advisers in Chicago. “I’m confident a new president can have an enormous impact.”

Wall Street revived somewhat after two days of big losses. The Dow Jones industrials rose 248 points.

Still, the Labor Department’s unemployment report provided stark evidence that the economy’s health was deteriorating at an alarmingly rapid pace. The jobless rate was 4.8 percent just one year ago.

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Make-or-Break Holiday Season Looms Large for Retailers Amid Global Financial Crisis

October 9, 2008

By Ylan Q. Mui and Kendra Marr
Washington Post Staff Writers
Thursday, October 9, 2008; Page A01

Each day of financial tumult is bringing more pressure to bear on the nation’s retailers — and time is growing short.
Yesterday, as the clock ticked ominously down to the critical holiday season, department stores and clothing retailers reported a sharp drop in sales while Target said its shoppers are delinquent in their store credit card payments. Port traffic, meanwhile, has been plummeting as retailers cut back on inventory.

“I don’t think anyone predicted a crisis of this magnitude that couldn’t be fixed quickly,” said Bob Carbonell, chief credit officer for Bernard Sands, a retail rating and credit services agency. “If the American housewife puts the money under the mattress, we’re in deep trouble.”

In a year that seems to be defying all economic expectations, retailers are struggling to plot a course through the make-or-break holiday season, which accounts for nearly 20 percent of their sales each year. Will they have access to credit? How much merchandise should they order? Will anyone buy it? The moves they make now could determine where they stand in January.

The past three months were expected to bring the deepest cuts in consumer spending since the 1991 recession. September’s dire economic news — from the collapse of Lehman Brothers to the freefall in the financial markets to the government’s $700 billion rescue plan — have spooked shoppers and eroded confidence. On the day that the House of Representatives rejected the rescue plan, mall traffic plunged 12 percent, according to research firm ShopperTrak.

Scott and Elaine Bourdeau feel the ripples. The couple, who live in Herndon, had planned to travel to Italy for their 10th anniversary but opted instead to save money with a short trip to the San Francisco Bay area. They’re postponing remodeling their bathroom and focusing on necessities — clothes for their two daughters.

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p-dyn/content/article/2008/10/08
/AR2008100804024.html?hpid=topnews

Oil soars to record above $117

April 21, 2008

By Ikuko Kao

LONDON (Reuters) – Crude oil prices surged above $117, setting a new record high on Monday because of worries of supply disruptions from major producers and comments by OPEC reiterating there is no need to raise output.

U.S. light crude struck a record high of $117.40 a barrel. It was trading 27 cents higher at $116.96 by 1155 GMT (7:55 a.m. EDT).

File photo shows an aerial view of new oil platforms P-52 for ...
File photo shows an aerial view of new oil platforms P-52 for the oil company Petrobas at Campos basin in Rio de Janeiro, 28 November, 2007.(Bruno Domingos/Reuters)

London Brent crude also struck its all time peak of $114.65. It was trading at $114.20, up by 28 cents.

The Organisation of the Petroleum Exporting Countries (OPEC) sees no need to raise oil production to counter high oil prices, the group’s president Chakib Khelil said on Sunday.

His remark was followed by Iranian oil minister Gholamhossein Nozari, who said on Monday oil prices were not too high in real terms.

“OPEC’s assertion that an increase in its oil production will not help to bring down prices should be put to the test,” the Centre for Global Energy Studies said in a research note.

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AgIP06EfqKIHJBMCg4mNjQqs0NUE

China’s Economy Up, Inflation Stays

April 16, 2008

(BEIJING) — China’s economy grew 10.6 percent in the first quarter, slowing only slightly amid gloom about the global economy, but inflation stayed above 8 percent despite efforts to ease food shortages, the government reported Wednesday.
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Beijing said expansion in the world’s fourth-largest economy was driven in part by a 21.5 percent jump in retail spending in March.

“Todays data confirm the growing strength of the Chinese consumer generating domestic economic growth,” said Moody’s Economy.com economist Matt Robinson in a report to clients.

Inflation figures were a setback for communist leaders who have made a national priority of taming a price spike that has battering consumers since mid-2007, due to shortages of pork, grain and other key food items.

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http://www.time.com/time/business/article/0,8599,1731386,00.html?xid=rss-topstories

Payrolls May Have Slumped for Third Month: U.S. Economy Preview

March 30, 2008

By Bob Willis

March 30 (Bloomberg) — The U.S. lost jobs for a third month in March and manufacturing contracted at the fastest pace in five years, signs the economy continues to turn down, economists said before reports this week.

Payrolls probably shrank by 50,000, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department’s April 4 report. The last time the economy lost jobs for at least three consecutive months coincided with the start of the Iraq War in 2003.

“The economy has slipped into a recession,” said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. “We expect the labor market to weaken, with payrolls falling steadily through the middle of next year.”

Job losses, slumping confidence and the biggest plunge in housing in a generation all point to a slowdown in consumer spending that will weaken growth. Federal Reserve Chairman Ben S. Bernanke will testify before Congress this week after lowering interest rates and extending credit to non-banks in an attempt to calm financial markets.

The projected decrease in payrolls would follow a decline of 63,000 in February and a smaller drop in January. The jobless rate likely rose to 5 percent from 4.8 percent, the survey said.

Factory payrolls in March probably shrank by 40,000 workers, reflecting automakers’ efforts to trim costs and a strike at a suppler for General Motors Corp., economists project the jobs report may show.

Strike’s Influence

A walkout by workers at American Axle & Manufacturing over pay and benefits that started on Feb. 26 has idled almost half of GM’s North American workforce. The payroll figures may be reduced by as much as 20,000 workers because of the effects of the strike, according to Morgan Stanley economist David Greenlaw.

Ford Motor Co., which lost $15.3 billion in the past two years, may cut more jobs in North America, Chief Executive Officer Alan Mulally said earlier this month.

“The old ways of doing business are gone,” Joe Hinrichs, Ford’s manufacturing chief, and Marty Mulloy, vice president of labor affairs, said in a March 19 commentary sent to newspapers in communities where Ford has plants. “We must continue to downsize and simply will not have enough jobs for all of our current hourly workers.”

Job losses in financial markets are also mounting following the collapse in subprime lending.

Wall Street banks hit by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months, the most since the dot-com boom fizzled in 2001, according to the Securities Industry and Financial Markets Association.

Job Losses

This year, banks including Lehman, Citigroup Inc. and Morgan Stanley have been reducing staff in fixed income trading, securitization and investment banking. So far, Lehman has eliminated 18 percent of its workforce, Morgan Stanley has cut 6.2 percent, and Merrill Lynch & Co. has trimmed 4.5 percent.

“Rising unemployment should continue to slow wage growth, adding to the strain on consumers,” said Lehman’s Harris.

Manufacturers are retrenching as demand weakens. The Tempe, Arizona-based Institute for Supply Management may report April 1 that its factory index fell to 47.5 this month, the lowest level since April 2003, from 48.3 in February, according to the survey median. A reading of 50 is the dividing line between expansion and contraction.

The following day, the Commerce Department may report that factory orders in February dropped 0.8 percent following a 2.5 percent decline the prior month.

Services Contract

In another sign that the housing recession is dragging down other areas, service industries contracted for a third month in March, the ISM is projected to report on April 3.

The group’s non-manufacturing index, which covers 90 percent of the economy, fell to 48.5 this month, from 49.3 in February, according to the median forecast. Services haven’t contracted for three consecutive months since 2001-2002, when the economy was emerging from the last recession.

“The tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters,” the Fed said March 18 following its last policy meeting. “Growth in consumer spending has slowed and labor markets have softened.”

Bernanke will elaborate on the outlook before the Joint Economic Committee of Congress on April 2.

Seeking to ease credit, restore confidence to financial markets and cushion the slowdown, the Fed on March 18 lowered its key rate by three-quarters of a point and vowed to act “as needed” to cushion the economy. The Fed has cut the benchmark rate by 3 percentage points since September.

Gasoline prices hit new high, seen jumping more

March 10, 2008

NEW YORK (Reuters) – U.S. average retail gasoline prices have reached a new high of almost $3.20 per gallon and will likely jump another 20 to 30 cents in the next month, worsening the pain of consumers struggling to make ends meet in an economic downturn.
The price of unleaded super gasoline is $4.019 at a Valero gas ... 
The price of unleaded super gasoline is $4.019 at a Valero gas station in Los Angeles March 7, 2008. Gas prices extended their advance toward record levels on Thursday. The national average price of a gallon of gas rose 0.7 cent overnight to $3.185, according to AAA and the Oil Price Information Service. Gas prices are following oil higher, and are expected to peak this spring well above last May’s record of $3.227 a gallon.(AP Photo/Damian Dovarganes)

Gasoline prices are rising sharply as refiners, who have kept prices down in order to compete for sales, become more willing to pass on their higher costs of crude oil, according to an industry analyst on Sunday.

The national average for self-serve regular unleaded gas was nearly $3.20 a gallon on March 7, up about 9.44 cents per gallon in the past two weeks, according to the nationwide Lundberg survey of about 7,000 gas stations. The price has risen 64 cents per gallon in the past 12 months.

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LtoefLVc1hlO7Ly2IZqas0NUE

Employers slash jobs by most in 5 years

March 7, 2008
By JEANNINE AVERSA, AP Economics Writer

WASHINGTON – Employers slashed jobs by 63,000 in February, the most in five years, the starkest sign yet the country is heading dangerously toward recession or is in one already.
The Labor Department’s report, released Friday, also showed that the nation’s unemployment rate dipped to 4.8 percent as hundreds of thousands of people — perhaps discouraged by their prospects — left the civilian labor force. The jobless rate was 4.9 percent in January.

Job losses were widespread, with hefty cuts coming from construction, manufacturing, retailing, financial services and a variety of professional and business services….

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As5tO4QhdpqT6mK6AQOs0NUE

Food Prices: 17 Year High?

January 11, 2008

COLUMBIA — Consumers all over the world can expect to pay more for food in coming years.

The Economic Research Service of the U.S. Department of Agriculture expects prices to rise another 4 percent this year. If the projected increase for 2008 proves true, consumers will see the highest increase in food prices since 1990.

With commodity prices hitting record levels and energy costs increasing, retailers must make up for the difference in the form of higher food costs.

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http://www.columbiamissourian.com/stories/2008/
01/09/food-prices-expected-rise/

Nobody Wants to Say “Recession,” Especially the Fed

January 10, 2008

By John E. Carey
Peace and Freedom
January 10, 2008
Updated 1700 Eastern Time USA

Home sales are in crisis, unemployment benefit applications are at an all time high, and retail sales in December were the worst in 5 years.  Recession? 

The Federal Reserve says no. 

The Wall Street traders we spoke to said, “Yes.  Absolutely.  To say the U.S. is not in a recession is to deny the trouble — the problem — and not face the urgency of our difficult times.  The question is not ‘Are we in a recession?’  The question is ‘When will it end?'”

Home furnishings manufacturer and retailer Ethan Allen Interiors Inc. plans to close 12 retail stores and two service centers, cutting operating costs amid a slowdown in the housing market.

Retail sales in December wore the worst in five years.

Although WalMart and Costco booked small gains in December sales (between 2 and 4%); their earnings reports were seen by analysts that shoppers were turning to more cost effective products like bulk food supplies.

Concerns about higher gasoline prices and food costs as well as declines in the credit and housing markets have reduced shoppers’ mall trips and made them tighten their purse strings, analysts said.
A lack of must-have fashion items over the holiday sales season also hurt the appetite for apparel buying, they said.Retailers, while trying to keep inventory lean at the start of the season, have been pressured to give more discounts to clear unsold merchandise, pressuring profit margins, investors said.

All the “higher-end” retail stores reported sharp drops in December sales: some over 10%.

Macy’s sales declined 7.9%, worse than a 6.5% drop expected by analysts and missing the company’s own forecast of a drop of 4% to 7%. The department store retailer forecast fourth-quarter profit to be at the low end of its forecast range of down 2% to up 1%. It sees January sales to decline by 4% to 6%.

Hiring stagnated in December, pushing the unemployment rate up to 5 percent, a two-year high.

Financial analysts are loathe to use the word “recession.”

One TV financial expert told Peace and Freedom, “If I say on TV that the U.S. is in a recession, every corporate man that expected to hire three people today might only hire one. Using the word recession typically means consumer and business spending will decline some simply because of the psychological impact of that awful word ‘recession.’”

Interet rates will likely be cut to improve buying and boost the economy.
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Fed ready to cut interest rates again

By JEANNINE AVERSA, AP Economics Writer 
January 10, 2008
1300 Eastern USA
 

WASHINGTON – (AP)  Federal Reserve Chairman Ben Bernanke pledged Thursday to slash interest rates yet again to prevent housing and credit problems from plunging the country into a recession.

Federal Reserve Chairman Ben Bernanke addresses a housing and ...
Federal Reserve Chairman Ben Bernanke addresses a housing and economic forum, Thursday, Jan. 10, 2008 in Washington. Even though he said the Fed would lower interest rates, he refused to admit that the US was in a recession.  Wall Street traders said he did not understand the problem or the urgency.
(AP Photo/Gerald Herbert)

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