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Falling Retail Sales Dampen Recovery Hopes

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Retail sales plunged to a 14-month low in the early part of this month after unusually cold weather and the biggest price rises in two years deterred shoppers.

The news confounded expectations by retailers and economists that sales would go up again, and dealt a blow to hopes that the economic recovery was gaining traction.

Nearly half of retailers said that sales were lower in the first two weeks of May compared with the same time last year. Only 30 per cent said that sales rose, according to figures from the CBI.

The resulting balance of -18 is down from 13 in April and is the lowest reading since March last year. Economists had forecast a reading of 12.

Ian McCafferty, chief economic adviser to the CBI, described the figures as “disappointing”. He added: “It appears that shoppers are feeling the pinch again and are being cautious, given the squeeze to real incomes from higher prices and only a modest rise in average pay.” Stores predict that the gloom will continue, as the expected sales balance for June fell to its lowest since August 2009 at -15.

Jonathan Loynes, European economist at Capital Economics, said the figures suggested that “consumers might finally be starting to buckle under the weight of a heavy debt burden, falling spending power and the coming fiscal squeeze.

“It is too soon to be sure that shoppers’ resilience is on the wane. Still, the fact that both retailers’ orders and their expectations for sales next month also dropped sharply might suggest that this is more than a blip,” he added.

It's the consensual salesless recovery and it's locked in!

Tax receipts can only increase on this news...

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Consumers earned more income in April but they also spent less, according to government statistics released Friday, raising some questions about the pace of the recovery.

The Commerce Department said that personal income rose by $54.4 billion, or 0.4 percent, in April. Spending increased $4 billion, and was essentially flat. Both were less than economists had forecast. In March, personal income increased 0.4 percent and spending 0.6 percent, based on revised estimates.

Savings, on the other hand, grew; the rating rose to 3.6 percent in April from 3.1 percent in March. Personal savings were $398.5 billion last month, compared with $342.7 billion in March.

“It puts a modest dent for the outlook for consumption growth in the second quarter,” Paul Dales, the United States economist for Capital Economics, said of the report. “I think consumption has some near-term momentum. The figures are disappointing but they are far from being a disaster.”

According to the report, spending decreased on such nondurable items as utilities and groceries. Spending on durables, like cars or household appliances, was flat, compared to 3.7 percent up in March.

Guy LeBas, the chief fixed-income strategist for Janney Montgomery Scott, said one factor that might have contributed to the drop in April was an early Easter, which sent spending for that holiday into the March calculations.

Thank god consumer spending isn't the driving force in the US economy....

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...The news... dealt a blow to hopes that the economic recovery was gaining traction

so... there is a recovery [well, we've known this for ages, it was around almost 15 months ago, and it had a name, 'the recovereh'] but it lacks "traction"...

Edited by the flying pig

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Let us not forget that VAT had been dropped to 15% & is now heading to 20% !

That is going to help ...................not!


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Anecdotally, things have been noticably slower on the high street since QE was suspended.

What's the betting that a come the autumn moronic Merv will fire up the printing presses again to buy retailers and speculators a bit more time? Of course with grinding Japanese style deflation it will have progressively less effect.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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