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March Retail Sales Fell as Consumers Cut Back

April 12, 2013 by Leave a Comment

Retail sales declined a seasonally adjusted 0.4 percent last month, compared with February, the Commerce Department said on Friday. That followed a 1 percent gain in February and a 0.1 percent decline in January. The figures for February and January were both revised lower from initial reports.

Consumers cut back spending across a wide range of categories last month. Sales at auto dealers dropped 0.6 percent. Gas station sales dropped 2.2 percent, partly reflecting lower prices for fuel. The retail figures are not adjusted for price changes.

Excluding the volatile categories of autos, gasoline and building materials, core sales dropped 0.2 percent in March. That followed a gain of 0.3 percent in February. Department stores, electronics retailers and sporting goods outlets all reported lower sales.

The retail sales report is the government’s first look at consumer spending, which drives about 70 percent of economic activity.

The decline in March shows that higher Social Security taxes are starting to affect consumers and could blunt growth in the spring.

Many economists still predict that economic growth accelerated to an annual rate of roughly 3 percent in the quarter from January to March. That would be a significant increase from the anemic growth rate of 0.4 percent reported for the quarter from October to December.

Still, economists say the improvement is most likely temporary. Many now expect weaker spending will be among factors that slow growth again in the quarter from April to June quarter, with an annual growth rate of around 1.5 percent.

“The U.S. consumer looks a little less resilient,” said Michael Feroli, an economist at JPMorgan Chase. “It now appears that close to $200 billion in higher taxes may have actually had some impact on consumer spending.”

A separate report Friday on consumer confidence for April seemed to underscore that point.

The University of Michigan’s preliminary survey of consumer sentiment fell to 72.3. That’s down from 78.6 in March and the lowest since July. The discouraging jobs report and other weak economic reports are probably responsible for influencing consumers’ sentiment.

Companies are also less optimistic about the next few months, according to a separate Commerce Department report issued Friday. Businesses increased their stockpiles only 0.1 percent in February, the smallest gain in eight months. That suggests that companies had expected sales to weaken this spring, a point confirmed by the March retail sales figures.

Economists said restocking would probably remain tepid in the quarter from April to June. Slower restocking means companies order fewer goods, which slows factory output and growth.

“The economy appears to have lost some momentum,” said Paul Dales, an economist at Capital Economics. “But with gasoline prices now falling, we don’t expect too sharp a slowdown.”

The cost of a gallon of gas averaged $3.56 nationwide Thursday, down from $3.70 a month earlier, according to AAA.

The increase in Social Security taxes has lowered take-home pay this year for nearly all workers. Someone earning $50,000 will have about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less.

There were a few positive signs in the retail spending report. Furniture stores reported a 0.9 percent sales increase, suggesting that the housing recovery was still encouraging more spending. And sales at hardware and garden supply stores ticked up 0.1 percent, despite an unseasonably cold March.

But sales at general merchandise stores, which include major department stores like Macy’s and big discount stores like Walmart and Target, dropped 1.2 percent.

Article source: http://www.nytimes.com/2013/04/13/business/economy/march-retail-sales-fell-as-consumers-cut-back.html?partner=rss&emc=rss

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Your Money: How to Make the Case for Higher Pay

November 26, 2011 by Leave a Comment

But you’ve been doing that for several years now. And in that time, the cost of your health insurance has gone up, along with college tuition, gasoline and a host of other things. Your pay, meanwhile, has been stagnant.

Asking for a raise is hard enough in normal economic times. But now, you can’t help wondering: does the mere act of asking for more money come with its own risks?

“If you are a good-performing employee who is contributing, I think it poses zero danger,” said Mike Zwell, a consultant and author of “Six-Figure Salary Negotiation” (Adams Media, 2008). “The worst that will happen is that they will say no, and give you some reason for it.”

There have been some encouraging signs on pay lately. Only about 9 percent of companies have put pay freezes in place over the last 18 months, a rate more in line with historical levels. That’s down from the nearly two-thirds of companies that had pay freezes in place in January 2010, according to research conducted by Buck Consultants.

“The reality is that most companies have responded very quickly and effectively to the changing economic conditions,” Mr. Zwell said. “So the feelings of scarcity are much greater than the actual scarcity for those who are employed.”

Still, compensation budgets remain tight, and the employees who are getting raises tend to be their company’s top-performing stars with unique skills — in other words, the employees who stand the highest risk of being poached by competitors.  

But even if you are one of the lucky ones and your request is granted, the rewards aren’t likely to be nearly as generous as you may have hoped. Most recently, the typical merit increase has been 1.9 to 2 percent on average, whereas the highest-performing employees are getting closer to 4 percent, according to Stephen Mork, principal of global compensation and benefits at Buck Consultants.

By contrast, in 2007, the average merit increase was about 3.8 percent for a midlevel manager, which was largely in line with raises across all employee levels. “Four percent was the good old days,” Mr. Mork said, noting that in 2006 and earlier, raises of 4 to 5 percent were not uncommon.

How can you set yourself apart? Much depends on how you are perceived and your overall approach when you pop the question. So before you walk into your boss’s office, several career gurus suggested considering the following:

ARE YOU DESERVING? Well before you ask about a raise, you need to get a sense of how you are perceived. Most workers have said their employers don’t provide enough feedback, according to Buck Consultants. And as much as that says about supervisors’ lack of communication, it also shows that employees aren’t doing enough either. “If you are not getting those measures, then you are not managing your career properly,” Mr. Mork said, “and that ties into your pay and asking for merit increases.”

So if your employer doesn’t have formal performance reviews in place, set up a time to ask your supervisor about how you’re doing.

THE PREPARATION Once you’ve decided that you are deserving, take the time to build your case. Ideally, your higher-ups already have an idea of how you’re doing, which means you’ll need to engage in a modest amount of self-promotion over the course of the year. “You need to have an internal and external P.R. strategy,” said Jeffrey Pfeffer, professor of organizational behavior at Stanford’s business school and author of “Power: Why Some People Have It — and Others Don’t” (HarperBusiness, 2010). “You need to build a reputation. You need to have people know who you are.”

You should also keep a file of the “attaboy and attagirl” letters from associates or clients, which will help justify your request. And keep track of any additional responsibilities you’ve taken on, perhaps because others were laid off or your role has simply evolved or expanded.

Meanwhile, try to frame your contributions in measurable ways, said Marty Martin, an associate professor of human resources at DePaul University and a financial psychologist at Aequus Wealth Management in Chicago. That is easier to do in some positions than others — like sales, for instance — so you may need to get creative.

Putting it all down on paper will help you organize your thoughts. On one side, make a column listing all of your responsibilities. In another column (which should be considerably longer), list what you’ve accomplished in order of importance, said Kate Wendleton, president of the Five O’Clock Club, a career coaching organization.

Going through this exercise will help you develop a strong case for your supervisors, many of whom don’t even control the company purse strings. So make their job easy. “To give you a raise, your boss must ask his or her superior, which is probably just as nerve-racking for your boss as it was for you,” Ms. Wendleton said.

Article source: http://feeds.nytimes.com/click.phdo?i=2b5023221ecc0c5f07e6ab77243fd75e

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Americans’ Savings Rate Drops Again, Puzzling Experts

October 29, 2011 by Leave a Comment

But the surge has not been sustained. In September, the nation’s savings rate dropped for the third consecutive month, the Commerce Department said Friday. It is now at 3.6 percent of personal disposable income, its lowest level since the month the recession began.

The latest decline raises the question of whether consumers are returning to their old spendthrift habits or were temporarily relaxing budget restrictions to make long-awaited purchases.

Real personal after-tax income declined in September, just as it did in July and August. Even so, consumers spent more, for an increase of 0.6 percent in September.

The increase in consumer spending was widely embraced as good news, a sign that consumers might be helping to propel the economy forward. Consumers account for roughly two-thirds of economic activity.

Economists warn, though, that increases in spending will be hard to sustain if Americans are doing it by simply putting a little less away every month.

Some of the spending increase was to cover necessities like medical bills and gasoline. Consumers also spent more on furniture and goods like televisions.

Scott Hoyt, an economist at Moody’s Analytics who specializes in consumer spending, said there were two competing hypotheses as to why the savings rate had dropped. “One is that consumers have just decided that they need to spend — they need to replace the car, the appliance, they want a new wardrobe.” The other, he said, is that the data, which is often revised months down the road, is simply incorrect.

“There have been several times where we spent a year or more talking about a negative savings rate” — meaning consumers spent more than they took in — “only to get benchmark revisions to the data,” Mr. Hoyt said. “The savings rate’s never been negative.”

Mr. Hoyt said he leaned toward the second explanation, in part because more spending was less likely with credit tight and consumer confidence at recession-level lows. But, with appliances and cars aging, there is pent-up demand for replacements.

In the decade leading up to the recession, Americans socked away an average of only 3.1 percent of their income, a much lower rate than in Europe, China, India and Japan.

After the crisis began, Americans raised their savings rate to above 5 percent. It slipped briefly below 4 percent in mid-2009 before climbing again.

Paul Ashworth, chief United States economist at Capital Economics, offered a partial explanation for the latest change. With interest rates so low, people who have money are earning lower returns, while people who owe money can service their debts for less. In effect, this has resulted in a transfer of wealth from people who are more likely to save — say, someone nearing retirement age — to someone more likely to spend — say, a young couple with a mortgage and a car loan.

But that would not account for the whole shift from saving to spending, he said. “Maybe households were desperate and didn’t know what else to do,” he said. “You can put off some discretionary spending, but there is a level of spending that you have to follow through on.”

Article source: http://feeds.nytimes.com/click.phdo?i=fe9f1723ce7098fc03110cd9842a549b

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Markets Rise Sharply on Retail Sales and Other Economic Data

June 15, 2011 by Leave a Comment

Analysts described the stronger market, which represented the Dow’s biggest gain this month, as a relief rally.

David Krein, a senior director for Dow Jones Indexes, said investors were pleased with the retail sales report. Best Buy’s fiscal first-quarter results also helped buoy the markets, Mr. Krein said.

The company reported earnings of $136 million, or $0.35 a share, compared with $155 million, or $0.36 a share, for the same period in 2010. The results beat forecasts, and shares of Best Buy rose more than 4.5 percent to $30.13.

An indicator of consumer purchasing from the Commerce Department showed that overall retail sales in May declined by 0.2 percent, less than the 0.5 percent fall that had been forecast by analysts surveyed by Bloomberg. The figure was a reversal of the 0.3 percent increase in April, and it was the first monthly decline after 10 consecutive gains.

While the decline was not as steep as expected, economists cited areas of concern.

“With higher gas prices eating into the income available for discretionary spending, the consumer faces stiff headwinds,” said Joshua Shapiro, the chief United States economist for MFR.

The Producer Price Index, which reflects commodity prices for manufacturers, rose 0.2 percent in May, according to seasonally adjusted figures provided Tuesday by the Bureau of Labor Statistics. The increase was slightly higher than the 0.1 percent analysts had forecast, and it was below the 0.8 percent rise in April.

The increase in May in the index was attributed mostly to prices for energy goods — including gasoline and electricity — which rose 1.5 percent, the eighth consecutive monthly advance. The food component of the index declined 1.4 percent.

Analysts suggested that the markets were helped after data from China pointed to an increase in industrial output as well as a rise in consumer prices that was in line with forecasts. That helped markets in Asia move higher, and the momentum continued in trading in Europe and the United States.

“It is a pretty powerful relief rally,” said Keith B. Hembre, the chief economist and chief investment strategist at First American Funds.

The Dow Jones industrial average closed up 123.14 points, or 1.03 percent, to 12,076.11. The Standard Poor’s 500-stock index rose 16.04 points, or 1.26 percent, to 1,287.87. The Nasdaq composite index average climbed 39.03 points, or 1.48 percent, to 2,678.72.

The stock market had been in a six-week slump, partly fueled by concerns over the pace of the global and domestic economic recovery, and concerns over sovereign debt problems in the euro zone.

Protracted political wrangling over the national debt ceiling in the United States also has been a factor. Moody’s Investors Service said early this month that it might downgrade the United States credit rating if lawmakers did not raise the ceiling “in coming weeks.”

On Tuesday, the chairman of the Federal Reserve, Ben S. Bernanke, warned about the consequences of continued delay, saying even a short suspension of payments on principal or interest on the Treasury’s debt obligations could severely disrupt financial markets.

He also said that interest rates soared as investors lost confidence, as seen in a number of countries recently.

“Although historical experience and economic theory do not show the exact threshold at which the perceived risks associated with the U. S. public debt would increase markedly, we can be sure that, without corrective action, our fiscal trajectory is moving us ever closer to that point,” he said.

On Tuesday, the yield on the Treasury’s 10-year note, which is linked to interest rates on mortgages and other borrowing, rose to 3.10 percent, from 2.98 percent late Monday. Its price fell 1 point, to 101 7/32.

Stocks, however, kept their momentum throughout the day.

J. C. Penney rose nearly 17.5 percent to $35.37, after the retailer announced that the head of Apple’s retail stores would lead its company.

The Apple executive, Ron Johnson, will replace Myron E. Ullman III as Penney’s chief executive on Nov. 1, the retailer said.

“The markets have been in a corrective stage, and I think we have reached levels now that perhaps we can see some renewed interest in terms of valuations,” said Peter Cardillo, the chief market economist for Avalon Partners.

Article source: http://feeds.nytimes.com/click.phdo?i=dc7596c913e44dc0fc8eaca95004bbd3

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