Friday, April 14, 2017

Doubts on the Economy After consumer retail and prices dip

http://www.cbsnews.com/news/consumer-prices-and-retail-sales-dip-stirring-doubts-on-economy/

For the second month in a row, retail sales have been falling. However, it is most likely temporary as the labor market is coming near to full employment. "The U.S. Labor Department said its Consumer Price Index dropped 0.3 percent in March, the first decline since February 2016, as declining costs for gasoline and mobile phone services offset rising rents and food prices." The slowdown in prices is partially being blamed on the late disbursement of income tax refunds by the government. With job growth averaging 178,000 per month the GDP likely underrates the health of the economy. Sales at electronics and appliances stores surged 2.6 percent,
The apparent slowdown in consumption is partly blamed on the late disbursement of income tax refunds by the government as it sought to combat fraud. Retailers have been affected by declining mall traffic and increased competition from online retailers, such as amazon.com. That has been forcing retailers like J.C. Penney (JCP), Abercrombie & Fitch (ANF) and Macy’s (M) to scale back.
The biggest factor in the monthly decline was a 6.2 percent drop in gasoline prices. Some believe that the FEDS will be disturbed by the unexpected drop, since retail sales dropped 0.2 percent last month and a 0.3 percent decrease in February, which was the first and biggest decline in almost a year. The Atlanta Fed predicts that the GDP will rise at a 0.6 percent rate in the first quarter, which would be the weakest performance in three years and follows a 2.1 percent. In addition, first-quarter GDP is weaker than usual because of calculation problems that the government has acknowledged and working to resolve. For three straight months, Retail sales last month were decreasing due to receipts at auto dealerships, which fell 1.2 percent. Rents increased 0.3 percent in March while food prices rose 0.3 percent. The cost of food at home increased 0.5 percent, which is the biggest gain since May 2014.

1) Do you think the decrease in sales will affect our economy dramatically?
2) What will happen to companys like Macy's, J.C. Penney, and Abercrombie & Fitch?
3) What is another possible factor that may bring down the decline?

2 comments:

  1. Decrease in sales will affect our economy as sales dropping also means that jobs within retail are going to drop for employees and will cause the economy change and the people within it

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  2. I agree with Fifita, the change is gonna be so great that it will cause a chain reaction.

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