July 6, 2022

Retail Sales Flat in August

The unchanged reading followed a 0.3 percent gain for July that was smaller than previously estimated, the department said. Prices paid by producers were also unchanged in August, according to the Labor Department, while so-called core costs that exclude food and fuel rose less than forecast.

The dim outlook for household spending, which accounts for about 70 percent of the economy, will make it hard for the two-year-old recovery to gain speed, giving the Federal Reserve reason to take additional steps to spur growth.

“Consumers are being more cautious given all the economic headwinds,” said Michael Feroli, chief United States economist at JPMorgan Chase. “Policy makers have to be focused on growth because growth seems to have come close to stalling in August.”

Another report from the Commerce Department showed inventories rose less than forecast in July, indicating companies were bracing for a slowdown in demand. The 0.4 percent increase in stockpiles matched the revised gain in June, which was larger than initially estimated. The median projection in a Bloomberg News survey was for a 0.5 percent advance. Sales climbed 0.7 percent in July, the most since March.

The median forecast of retail sales by 83 economists surveyed by Bloomberg News called for a 0.2 percent rise. The Commerce Department revised the July increase down from a previously reported 0.5 percent advance.

Eight of 13 major categories showed gains last month, led by grocery and sporting goods stores. Demand declined for big-ticket items like automobiles and furniture. Sales at clothing stores dropped 0.7 percent, the biggest drop since December.

Retail sales are not adjusted for inflation, indicating demand may have dropped after taking prices into account.

Purchases at automobile dealers dropped 0.3 percent after rising 0.2 percent in July, the report showed. Cars and light trucks sold at a seasonally adjusted annual rate of 12.1 million in August, down from a 12.5 million pace in the first half of the year and little changed from July, according to the researcher Autodata.

Purchases excluding autos increased 0.1 percent, below the 0.2 percent projected by analysts.

Payrolls in the United States, the world’s largest economy, stagnated last month, and unemployment held at 9.1 percent, Labor Department figures showed earlier this month.

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Retail Sales and Producer Prices Unchanged in August

Consumers spent less on autos, clothing and furniture in August, leaving retail sales unchanged, the government reported.

The Commerce Department also said retail demand in July was weaker than first thought.

Auto sales fell 0.3 percent in August. Sales at clothing stores declined 0.7 percent. Gasoline sales rose.

The flat reading for retail sales was a surprise, given private reports from retailers and auto dealers that suggested a brighter picture in August.

Major automakers reported healthy sales increases in August, largely because dealers introduced new models and offered cheaper financing. The nation’s major retailers reported solid results from the all-important back-to-school shopping.

A weak month for retail sales suggests growth may struggle to gain momentum in the second half of the year. Consumer spending accounts for 70 percent of economic activity in the United States.

Still, most categories were higher compared with a year ago. Auto sales were 6.9 percent higher than in August 2010, and clothing stores were 5.6 percent higher.

Also Wednesday, the Labor Department reported that companies paid the same amount for wholesale goods last month, as a drop in energy prices offset higher food costs.

Excluding the volatile food and energy categories, core wholesale prices edged up 0.1 percent, the smallest increase in three months. The figures indicate that inflation pressures are easing.

The Producer Price Index, which measures price changes before they reach the consumer, was unchanged in August, the Labor Department said, after a 0.2 percent rise in July.

Core prices rose 2.5 percent in the past 12 months, the same pace as July.

Food prices rose 1.1 percent in August, the largest increase since February. Wholesale gasoline prices, meanwhile, fell 1 percent in August, and home heating oil dropped 1.2 percent.

Sharp increases in the prices of oil, food and other commodities pushed up most measures of inflation earlier this year. But now that many commodities are becoming less expensive, inflation pressures are fading.

That has taken some of the pressure off the Federal Reserve to keep inflation in check by raising interest rates. Instead, the central bank can keep the short-term rate it controls at nearly zero, in an effort to support economic growth.

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Square Feet: Chinatown Mobilizes to Enhance Its Outside Appeal

One of them, Siowai Sang, the owner of Golden Jade Jewelry, said his sales were down 70 percent from pre-9/11 levels. His financial district clientele all but disappeared after the attacks, and the slow economy has not been good for nonessential purchases like jewelry, Mr. Sang said. “When markets go down, the jewelry business is the first to hurt and the last to recover,” he said.

Now an organized effort is being made improve Chinatown’s prospects. Retailers like Mr. Sang, who owns one of the 262 jewelry shops in and around Canal Street, as well as those who operate clothing stores, souvenir shops and restaurants, will be the focus of a new business improvement district financed by building owners. The organization will supply resources for public safety officers, new signage and marketing in an effort to make the teeming neighborhood more appealing to visitors. The district is expected to receive final approvals from the city this summer.

Mr. Sang serves on the board of the fledgling business district, which he said was long overdue. “We need somebody to manage garbage pickup, get rid of the smell and do promotion and advertising,” he said.

Chinatown has had relatively little new construction, even as it has expanded its boundaries north and east into Little Italy and the Lower East Side. Some hotels have been built near the fringes, but there is little modern office space and little on the drawing boards. Demand exists, particularly for doctors’ and dentists’ offices. Yet the real estate boom that buoyed much of the city earlier in the decade was felt less in Chinatown.

Ownership is the crux of the problem. Wellington Chen, the executive director of the coming business district, now called the Chinatown Partnership, said buildings of all descriptions, including side-street tenements, are owned by “associations” of Chinese business people as well as families, many of whom have owned all or part of a building for generations. Getting all parties to agree to a sale would be nearly impossible, he said, even if all the owners could be located. Assembling multiple contiguous parcels for new construction, like three or more tenement buildings, would be extremely difficult.

“Chinatown is the Wild, Wild West when it comes to finding out who the building owners are,” said Yvonne Chang, a broker with the Kaufman Organization who is marketing leases at a two-story building at 257 Canal Street.

Landmark status on some buildings is another obstacle to development, as is the significant number of rent-controlled and rent-stabilized housing units in the area. Mr. Chen said about 4,200 of the 5,000 apartments in the neighborhood are regulated. Ousting tenants in any of the regulated buildings is out of the question, even though some building owners would like to see them go so they could raise the rent.

Chinese owners also prefer to do business within the Chinese community, another factor that gets in the way of development. “They won’t go far past who they know, and they know everybody,” Ms. Chang said. “They market among themselves.”

The renovated 139 Centre Street, a nine-story commercial condo developed by Youngwoo Associates, whose principal, Young S. Woo, is Korean, is one example. On the market for two years, 120 of 144 units have been sold, all but one to professionals of Asian or Chinese origin. The exception is an American obstetrician, said Charlotte Cheung, the marketing sales director for the building. Many of the buyers, who are now paying about $850 a unit per square foot, down from a peak of $1,150 two years ago, have medical offices that cater to an Asian patient population that is willing to travel long distances to Chinatown to receive health care from professionals of their ethnic group.

Making it a condominium automatically geared it to Asians. “We like to own instead of rent,” Ms. Cheung said. “Many will stay 20 years or more and put a lot of money into capital improvements.”

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