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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Bill Harmond who wrote (10017)	12/13/2001 3:23:19 PM
From: stockman_scott	Respond to of 57684

Analysts Predict Economic Recovery Retail Sales Fall by Large Amount in November but Analysts See Reasons for Optimism By MARTIN CRUTSINGER Associated Press Writer Thursday December 13, 3:12 pm Eastern Time WASHINGTON (AP) -- Retail sales plunged by a record 3.7 percent last month as the holiday shopping season was getting under way. But more recent information looks brighter for the economy, suggesting the huge wave of job layoffs is abating. Noting the new government reports Thursday, analysts said they still believe the current recession, the country's first in a decade, will be a mild one that will be over by late spring. The Commerce Department report on retail sales showed the big decline in November following an even larger increase of 6.4 percent in October. Both figures were records under the government's current tracking system, which goes back to 1992. Both months were whipsawed by auto sales, which soared in October as dealers offered zero-rate financing deals to lure shoppers back into showrooms after the Sept. 11 terrorist attacks, only to retreat in November. In addition to the big swing in auto sales, retail activity in November was also depressed by falling gasoline prices, which pushed sales at service stations down. Without those special factors, retail sales would have posted a 0.1 percent increase in November. Analysts said this showed that the consumer sector, which accounts for two-thirds of total economic activity, was not collapsing despite all the bad news this fall -- from the terrorist attacks to the layoffs and confirmation that the country is in a recession. ``With the economy in the doldrums and unemployment rising, consumers are being smart. They haven't stopped shopping, they've only stopped buying everything in sight,'' said Oscar Gonzalez, economist at John Hancock in Boston. The government said new claims for unemployment benefits fell by 88,000 for the first week in December, the biggest decline in nine years, and a hopeful sign, analysts said, that the country may have seen the worst of the layoffs. Last week's drop pushed the level for new layoffs down to 394,000, significantly below the peak of 505,750 hit in mid-October. Unemployment in November surged to a six-year high of 5.7 percent, reflecting 800,000 new layoffs in just October and November, the worst two-month performance in more than two decades. Analysts said the big improvement in unemployment filings and the underlying strength in retail sales supported their view that the recession will be ending by late spring. ``Consumers have turned cautious but they haven't packed it in and there has been a clear improvement in the job market,'' said Mark Zandi, chief economist at Economy.com. A third report Thursday showed that prices at the wholesale level, led by another big decline in energy costs, fell for a second straight month. The Labor Department said its Producer Price Index dropped by 0.6 percent in November following a 1.6 percent decline in October. The Federal Reserve cut interest rates for an 11th time on Tuesday, pushing a key rate to its lowest level in 40 years. However, the reduction was only by a quarter point, instead of the bolder half-point moves the central bank had been employing, signaling to many economists that the Fed is close to the end of its credit easing. Minutes of the Fed's November meeting that were released Thursday supported that view. They showed that three Fed policy-makers had preferred a smaller quarter-point cut at that meeting even though in the end all 10 voted in favor of the half-point cut that was made on Nov. 6. Gasoline prices tumbled 10.3 percent at the wholesale level last month after an even bigger 21.2 percent drop in November. Food prices were also down for a second straight month, 0.8 percent in November following a 0.4 percent decline in October. Excluding the volatile food and energy sectors, the core rate of wholesale inflation posted a small 0.2 percent increase following a 0.5 percent drop in October. The government will release the November report on inflation at the consumer level on Friday and analysts believe that figure will also be well-behaved, reflecting big declines in gasoline pump prices. The retail sales report showed that auto sales, which had surged a record 24.2 percent in October, fell 11.9 percent in November. Sales at specialty clothing stores were down 0.6 percent and general merchandise stores showed a 0.1 percent decrease, but sales at furniture stores, sporting goods stores, electronic shops and restaurants all posted increases. On the Net: Labor's Bureau of Labor Statistics: bls.gov Commerce's Bureau of Economic Analysis: bea.doc.gov ___________________________ William: Not sure about the accuracy of my prior post...it was from Briefing.com.