The country might be hard-pressed to find someone who isn’t tired of the recession and the downturn in the economy. Americans’ need to have a return to “normalcy” was seen a couple weeks ago as the back-to-school retail numbers were not perfect, but were at least positive for the fact that major mall retailers saw the smallest sales declines in months. Consumers are beginning to show that they are weary of frugalness and want to spend, even though unemployment and bankruptcies continue to rise. And as NACM reported, the nation can expect an early kick-off of the winter holiday shopping season as retailers try to lure tentative consumers back to stores to spend those dollars they have so doggedly guarded.
Taking the economy as a whole, the U.S. Commerce Department’s Census Bureau reported this week that retail and food service sales for August rose 2.7%, which was much better than the 2.0% increase private analysts had anticipated. The numbers were heavily boosted by the federal government’s “Cash for Clunkers” program, as motor vehicle sales leapt up 10.6%. When taking that program out of the equation, sales excluding motor vehicles increased 1.1%, while sales excluding motor vehicles and gasoline rose a more modest 0.6%. Looking at just retail trade sales, the U.S. saw an increase of 3%, which is an encouraging sign as it fights in the opposite direction after four straight quarterly declines in retail sales.
For President Barack Obama, it reiterates his Administration’s mantra over the last couple months that the efforts set in motion by the American Recovery and Reinvestment Act (ARRA) have averted disaster and are beginning to show returns.
“Even excluding the strong growth in motor vehicle sales, which was a result of the successful ‘cash for clunkers’ program, this significant increase in consumer spending shows that the Recovery Act and President Obama’s other economic initiatives are succeeding in putting the brakes on the recession,” said U.S. Commerce Under Secretary for Economic Affairs Rebecca Blank. “Accelerated stimulus spending in the second half of this year will create jobs and further stimulate our economic recovery.”
The $351.4 billion in retail and food service sales in August provides momentum to the ongoing optimism about the economy, though it is still 5.3% below August 2008 and total sales from June to August are 7.6% below the same period last year.
Further brightening the mood is the fact that the U.S. current-account deficit decreased to $98.8 billion in the second quarter, which is the smallest deficit seen since the fourth quarter of 2001. The goods and services deficit fell from $92.4 billion in the first quarter to $83 billion in the second, while the deficit on goods slid down from $124 billion to $115 billion. U.S. international services trade continued to see a surplus, which increased from $31.6 billion in the first quarter to $32.5 billion in the second.
Meanwhile, the residential housing figures for August also moved in the right direction.
There are lingering fears from some economists that recovery will be “W”-shaped, with another downturn awaiting the nation on the horizon, and the economic situation in general is not without its critics.
“Since President Obama took office, over 3 million Americans have lost their jobs, including 2.5 million people since his stimulus took effect,” stated House Republican Whip Eric Cantor (R-VA). “At the time of its passage, the Administration argued that the stimulus would not only halt job loss, but create jobs and get the economy back on track in the short term.” Cantor pointed out that either has yet to occur.
Matthew Carr, NACM staff writer