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U.s. Retailers Report Lackluster Sales Gains

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Consumers appeared to take a breather last month, as sales at the nation’s retail stores posted only modest increases.

Discount stores led the increase, while apparel stores did better than expected and high-end retailers rebounded from depressed sales a year ago.

Teen apparel sales were lower.

The nation’s retailers reported an increase of 2.5 percent for May, up from an increase of 0.5 percent in April and a decline of 4.7 percent in May 2009, according to figures released Thursday by Thomson Reuters.

Analysts said poor weather at the start of the month and the late Memorial Day might have held sales figures down. Some retailers reported their sales through the 29th of the month, pushing sales over the Memorial Day weekend into their June reports.

Michael McNamara, the vice president for research and analysis at SpendingPulse, an information service of MasterCard Advisors, said consumers appeared to take a break after stronger sales months earlier in the year.

“This is really one of the first months that kind of feels a little bit more conservative,” he said.

“There is a pipeline of bad news,” he said. “There was plenty of news to make people pause a bit rather than build on the momentum we saw in the first quarter.”

Recoveries sometimes come in waves, Mr. McNamara said, “and we appear to be in the trough of one of those waves.”

While the 2.5 percent increase was better than the 0.5 percent increase in April, it compared with 3.3 percent increase in January, a 4 percent gain in February and a 4.8 percent increase in the months of March and April combined.

Perhaps the US needs more people in the foreclosure trap so they spend the money rather than paying off the debts?

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Labor Productivity And Costs: Blech

I don't like this one:

Nonfarm business sector labor productivity increased at a 2.8 percent annual rate during the first quarter of 2010, the U.S. Bureau of Labor Statistics reported today, with output rising 4.0 percent and hours rising 1.1 percent.

That sounds positive. The problem is here:

Unit labor costs in nonfarm businesses fell 1.3 percent in the first quarter of 2010, as the 2.8 percent increase in productivity outpaced a 1.5 percent gain in hourly compensation. Unit labor costs fell 4.2 percent over the last four quarters, as the 6.1 percent increase in output per hour over that period outpaced a 1.6 percent rise in hourly compensation.

That's trouble.


Because it's more of what I've noted before - work harder, get paid less for each unit of output, or you're fired!

But the pay you receive for each unit of output is what you then spend into the economy. If you are paid less for each unit of output then you are able to buy fewer units of output with your wages.

This makes business "profits" look good originally, but in the longer term it's a problem because without that income you can't buy what you produce and that ultimately results in business either having to cut prices (deflationary) which damages profitability or they wind up with unsold inventory at any price above the cost of production and they ultimately fail.

The trend continues, although it does appear to be dissipating a bit.

Interesting comments from Denniger.

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Looks like Denninger is finally coming around to understand the underlying problems.

If wages get beat down, while productivity rises it creates a growing output gap. This is why the powers that be had to create such a growing credit bubble over the last 2 decades.

Its not immediately obvious though. And it takes some thinking about the situation to realize what is happening. The first reaction of nearly everyone is to think.. we spent too much by borrowing, now we need to pay for that opulence by many years of hardship to pay back the debts.

This is the same thinking that people in the early 1930's believed. The 1920's had been too good, people had lived too well. Now the years of hardship goes on. And with this thinking they cut back and cut back, only to have the depression get much worse. It wasn't until they tried just the opposite.. spend and borrow to a level unthinkable before that they pulled out. And they realized the wealth of the 20's was not an illusion, it was the new wealth created by the new technologies of that era.

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  • 433 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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