Tags: Morici | Retail | Sales | Holiday

Morici: ‘Disappointing’ Retail Sales Point to Mediocre Holiday Season

Thursday, 13 Dec 2012 02:00 PM

Retail sales may have jumped in November from October, but the numbers are still disappointing, said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland.

The Commerce Department reported earlier that U.S. retail sales rose 0.3 percent in November from October, a noted improvement from a 0.3 percent monthly decline in October, though off from a Reuters poll of economists forecasting an increase of 0.5 percent.

Prices are up this year, accounting for the increase, plus there were more holiday shopping days last month, which should have driven sales higher.

Editor's Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Consumer demand, it appears, remains weak.

"Sales were up 3.7 percent from a year ago, but consumer prices are up 2.1 percent. This indicates real growth in consumer spending continues at the slower pace established in the third quarter," Morici wrote in his blog.

"November sales were particularly disappointing, because Black Friday and Cyber Monday play a larger role in holiday shopping each year."

The November retail sales likely point to a sluggish holiday season this year as well.

"Disappointing November retail sales indicate retailers will post a mediocre holiday season, and fourth quarter [gross domestic product] growth should come in well below the 2.7 percent third-quarter pace," Morici wrote.

"Should the president and Congress agree to substantially raise taxes —as the Administration proposes — a recession in 2013 will become more likely," Morici added, referring to a White House proposal to allow the Bush-era tax breaks to expire for top U.S. to drum up government revenue.

Other economists were hesitant to praise the increase in retail sales.

"Consumers have recovered somewhat after October's drop in sales, but the trend has been declining since last June," said Joseph Trevisani, chief market strategist at Worldwide Markets, in Woodcliff Lake, N.J., according to Reuters.

"When the results are adjusted for inflation, these are not numbers that will bring the Fed's employment goals any closer."

The Fed has said that it will keep interest rates low until unemployment rates fall to around 6.5 percent from a current rate of 7.7 percent.

Editor's Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

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