Feb 11, 2008

How bad will U.S. retail sales data be?By Angela BarnesTheGlobeandMail.com

If recent data from the International Council of Shopping Centers are any indicator, the retail sales report by the U.S. Commerce Department Wednesday is not going to be good news. The question is how bad will it be.

What economists already know is that the Christmas season was the poorest in the past five years for U.S. retailers, suggesting that the mighty U.S. consumer was no longer spending up a storm. And there are plenty of reasons for that: the mortgage and housing market messes, high energy prices and tighter credit conditions, to name just a few.

Economists also are aware of the January sales figures from 43 U.S. retailers surveyed by the International Council of Shopping Centers reported near the end of last week. Sales at stores open at least a year increased a seasonally-adjusted 0.5 per cent, year-over-year, well below the 0.8-per-cent forecast. And that reading, which made last month the worst for January sales since the organization began compiling those statistics in 1969, followed on a lacklustre 0.7-per-cent rise in December. The November figure was relatively robust – at 3.5 per cent.

The fact that the consumer continued to be a main driver of the U.S. economy over the past few quarters has been primarily a testament to “the underlying strength of the labour market, which has provided steady, albeit declining, job growth and good income gains,” economist Meny Grauman at CIBC World Markets Inc., wrote in a research note. “Unfortunately, this favourable state of affairs appears to be changing as the U.S. employment picture looks increasingly shaky.”

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