Tags: Goldstein | momentum | economy | sales

MarketWatch's Goldstein: 'Momentum From Economy Dour'

By    |   Wednesday, 15 October 2014 01:49 PM

Like many financial commentators, MarketWatch Washington Bureau Chief Steve Goldstein wasn't particularly encouraged by Wednesday's U.S. economic news.

The government announced retail sales fell a bigger-than-expected 0.3 percent in September and producer prices slipped last month for the first time in a year — by 0.1 percent.

"There are extenuating circumstances" for both reports, Goldstein writes. That includes falling gasoline prices, which put downward pressure on both retail sales and producer prices.

"But it was the weak tone in the retail sales report that was more worrisome," he says, noting that the building materials, apparel, non-store and furniture sectors all experienced decreases.

"One of the concerns about the slow-moving U.S. economic recovery is that the natural ebbs-and-flows of the business cycle could hit it before growth really got traction," Goldstein explains.

"That's not to say a recession is in the cards. The readings on the all-important labor market have been pretty solid, and it's pretty incredible the unemployment rate is already below 6 percent," he adds. "The continued jobs growth should lead to wage growth, which should lead to growing consumption, which may cure a lot of ills."

Others are concerned too. "The fact that real wages and salaries haven't picked up that dramatically, it puts a ceiling on how much spending can accelerate," Omair Sharif, an economist at RBS Securities, tells Bloomberg. Wages rose 2 percent in the 12 months through September.

"It seems like relatively widespread softness in spending. The pickup in consumption that we're all waiting for hasn't quite taken off yet," he said. That's important, because consumer spending accounts for about 70 percent of economic activity.

To be sure, some recent economic data has shown signs of strength, including the September jobs report.

"But what no one can deny is the momentum from the economy is dour," Goldstein writes. "And in the current market environment, there's not a lot that can be said to calm those fears down."

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Like many financial commentators, MarketWatch Washington Bureau Chief Steve Goldstein wasn't particularly encouraged by Wednesday's U.S. economic news.
Goldstein, momentum, economy, sales
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2014-49-15
Wednesday, 15 October 2014 01:49 PM
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