retail trade

The slow job market and the brutal cold weather shoved consumers away from stores after the December holiday season.

Retail sales in January saw a disappointing drop of 0.4 percent from the previous month, while economists expected sales to be flat. Depressing the sales were a very weak and volatile auto category that saw a drop of 2.1 percent, department stores that fell 1.5 percent, and sporting goods, hobby, book and music stores that fell 1.4 percent.

The total sales were only $427.8 billion, 2.6 percent above the January of a year ago. It is the second monthly straight decline after December (when retail sales showed a decrease of only 0.1 percent).

Some economists blamed the cold temperatures across the U.S. that weighed on the economy.

“Three quarters of the loss is weather related,” said Ken Mayland, president of ClearView Economics, LLC (firm specialized in forecasting and economic research), underlying that the retail sales expectations in February will again be affected by the weather’s impact. In Mayland’s opinion, there is nothing to worry about the overall economy: “The GDP in the first quarter will suffer, but any loss is going to be made up in its second quarter,” he said.

This slow down echoes with the rose of initial jobless claims. As the Labor Department data shows, about 339,000 people have applied for the first time for unemployment benefits since last week: it is a huge increase of 8,000 from the 331,000 registered in the previous week. The jobless claims are a significant key indicator for the economy activity: if the number of people that are losing their jobs and filing for unemployment benefits increases, it means that the economy is ill and it pushes down the consumer spending along with a reduction of businesses’ investment.

“Weather has a significant impact and it is the primary issue, also if there is a little bit of sentiment from weakness in jobs,” said Russell Price, senior economist for Ameriprise Financial Inc.

The numbers show that very clearly. According to the Bureau of Labor Statistics, last December only 74,000 jobs were created, and in January a disappointing 113,000. Those numbers were both below the expectations. In addition to that, the unemployment rate inched down to 6.6 percent, but it is still high: it is two percent higher than the one registered during Bill Clinton’s era.

“I think we will see a rebound in economy activity as weather improves,” said Price.

In fact, the National Retail Federation is positive: it forecasted a total rise of 4.1 percent in 2014.

But it is still a pretty low start for this year.



















































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