JUNE RETAIL SALES LOOK GOOD FOR DEPARTMENT STORES

Department stores and general merchandise stores helped June have a strong increase in retail sales. Department stores rose .7% to $13.2 billion and general merchandise stores rose .4% to $56.1 billion. Overall, retail sales rose .6% in June, to $457 billion, above economists’ expectations for the month.

“June’s retail sales grew at a solid pace on the heels of a strong showing for both May and April,” said Jack Kleinhenz, chief economist at the National Retail Federation. “Consumer spending has rebounded strongly in the second quarter after two weak previous quarters. Additional job gains and rising wages are supporting the strength in retail sales and should provide momentum going into the second half of 2016.”

Apparel and accessories stores had a slight decline of a 1% drop in sales to $21.1 billion. Those clothing stores did have a strong May.

Economists are optimistic for a continued strong second half of the year, and expect back to school sales growth slightly higher than was seen last year.

Source: WWD.COM

FIRST QUARTER 2016 CONSUMER ECONOMIC NEWS: SPENDING IS SOFT BUT HOME SALES RISE

As the first quarter of the year comes to a close, consumer spending stayed soft, rising just 0.1% for the third consecutive month. Incomes have been rising faster than that rate, indicating that Americans seem to be saving rather than spending. Gross Domestic Product (GDP) growth also slowed. Consumer spending generates more than 2/3 of total US economic output. Economists are concerned but a recession is not being indicated yet since the markets stabilized and the job market appears to be on track.

On the home sales front, there is more optimistic news. Pending home sales jumped 3.5% in February, the highest level in 7 months. Pending sales offer insights into future sales activity. The Realtors’ is forecasting 5.4 million existing-home sales this year, an increase of 2.4% from 2015. The housing market in 2015 was the strongest since before the recession and 2016 seems stronger yet.

Source: Wall St. Journal

Economic Mixed Messages

By Chad Symens

This article recently caught my attention and the wheels started turning: http://www.cnbc.com/2016/02/11/is-the-us-economy-running-out-of-gas.html

The current economic situation is confusing to the casual observer.  On the one hand, President Obama regularly speaks about the US economy being the strongest and most resilient economy in the world, and yet articles like this create doubt in the minds of the average observer.  Gas prices are at historic lows, and the unemployment rate is back down to pre-recession levels.  Yet polls consistently show that Americans are unhappy with the the direction of the economy and the leading presidential candidates are outsiders running campaigns against the "establishment".  Q4 earning and full year earnings are also confusing. Home improvement stores are doing very well, but department stores and large mass merchants are struggling.  Today the Federal Reserve sent conflicting messages about the economy being strong, and the possibility of a recession is still out there.  

What are we supposed to make of all this?  

I'm no economist but my observation is the average American consumers are pulling back on discretionary spending and focusing on paying down debt and putting some extra money into their savings.  Home improvement retail sales clearly show consumers are investing into their homes and taking the savings at the gas pump and putting it into their homes or their savings accounts. Depending on your point of view this can be both positive and negative considering US consumers have historically had higher levels of debt than other countries. But the debt level of the US consumer is rapidly decreasing. Does the generally conservative approach to finances mean consumers, who drive the economy, are pulling back and won't help to sustain the economic recovery?  

Business at Accelerated Analytics has been expanding exponentially in the last 90 days. We are seeing companies across multiple retail channels invest into analytics and reporting because they understand that to win at retail they have to be smarter and faster than their competition.  Those businesses are investing into productivity and technology, not pulling back.  These businesses are small, medium, and large. They represent a good cross section of the economic landscape and watching them invest makes me optimistic.  I believe the economy is going through a routine cycle of smart and successful companies growing and investing and conservative companies that only risk and fear pulling back.  To me it seems to be a very Darwinian cycle where the smartest and strongest will thrive and the weak will struggle and possibly fail.  

I'm bullish on the economy's prospects.  What do you think?