Recession? What recession?:
from today's WSJ:
The Commerce Department reported that sales at the nation's retailers shot up 7.1% last month after declining a revised 2.2% in September. The surge was led by an extraordinary 26.4% jump in auto sales, which were boosted by zero-percent financing and other incentives. Excluding autos, retail sales still grew 1%, better than the 0.4% consensus estimate. All figures are seasonally adjusted.
Non-auto sales would have been even better had it not been for a 6.4% decline in gasoline receipts, primarily the result of lower fuel prices. Excluding both gasoline and automobiles, retail sales rose 1.8%, all but erasing September's 1.9% decline.
A strong rise in consumer spending, which represents about two-thirds of total U.S. economic activity, is encouraging news for the ailing economy. Many economists have worried that the growing ranks of unemployed workers would stop shopping and those still working would grow cautious and start pinching pennies.
But Wednesday's report suggested that retailers are offering discounts and other deals that consumers can't refuse. "Layoffs hurt the laid-off. But those working are enjoying [tax] rebates, refinancings, lower interest rates and rising real wages. So spending is going to increase -- it's just that simple," said Ian Shepherdson, a senior economist at High Frequency Economics in Valhalla, N.Y.
Meanwhile, economists surveyed by the National Association for Business Economics predicted that the heavy dose of federal stimulus will help the economy rebound swiftly from its current slump. The forecasters expect the economy to emerge from recession by April and believe that inflation-adjusted gross national product, the value of the nation's total output, will reach a growth rate of 4% in the fourth quarter of 2002.
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Freddie Mac, the giant government-sponsored mortgage-finance company, said home prices rose at a 6.6% annual pace during the third quarter. While that is slower than the 8.1% rate during the second quarter, it is still considered strong.
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