<U.S.Economy> Uncle says U.S economy is the 'envy of the world'.Must read.
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Greenspan Calls Economy 'Envy of World'; Jan. Retail Sales Up 0.2 Percent
U.S. Economy: Retail Sales Up, Jobless Claims Fall
(Update2)(Updates markets.)
Washington, Feb. 11 (Bloomberg) -- Federal Reserve Chairman
Alan Greenspan called the U.S. economy ''the envy of the world''
today as the government reported that retail sales rose in
January for the sixth straight month and jobless claims fell last
week to the lowest level in 18 months.
''We have an economy which is functioning exceptionally
well,'' Greenspan told the House Banking Committee.
Retail sales rose 0.2 percent last month, led by gains at
discount and department store chains such as Wal-Mart Stores Inc.
and Dayton Hudson Corp. and at Gap Inc. and other clothing
stores, Commerce Department figures showed. While that's down
from December's 1 percent gain, last month's increase would have
been higher if energy prices hadn't fallen, which reduced the
value of sales at gasoline stations.
First-time jobless claims unexpectedly fell by 13,000 in the
week ended Feb. 6 to a seasonally adjusted 281,000, the Labor
Department said. That's the fourth straight weekly decline and
the lowest level since the week ended July 26, 1997, when claims
totaled 276,000.
''It's an unusually strong and vibrant economy,'' said
Cynthia Latta, an economist at Standard Poor's DRI in Lexington,
Massachusetts. ''People are working and spending money.''
After Greenspan's remarks, in response to questions after he
testified on updating banking laws, U.S. stocks rose. The Dow
Jones Industrial Average rose 113 points, or 1.23 percent in
afternoon trading, and the Nasdaq Composite Index rose 68 points,
or 3 percent. The Treasury's benchmark 30-year bond was little
changed to yield 5.36 percent.
Consumer Momentum
The combination of low unemployment and rising incomes,
along with the extra cash pocketed from early receipts of tax
refunds and refinanced home mortgages, will keep consumer
spending strong for the next few months, economists said.
January's sales gains, on top of a robust December --
completing the fastest rise in consumer spending in 14 years in
1998 -- ''suggest consumer demand had a good deal of momentum
heading into the first quarter,'' said Rick MacDonald, an
economist at Standard & Poor's MMS in Belmont, California.
The Commerce Department report showed that sales at
department and discount stores rose 1.5 percent last month.
Clothing store sales rose 1.0 percent and drug stores posted a
0.8 percent increase.
January sales at Wal-Mart Stores, the biggest U.S.
retailer, surged 10 percent, its largest increase since May. Same-
store sales at Kmart Corp. rose 8.5 percent last month, its
biggest gain since April. Dayton Hudson, which gets about 75
percent of its revenue from the Target discount chain, said sales
rose 9.6 percent.
Gap Inc., whose clothing chains include Old Navy and Banana
Republic, said same-store sales rose 15 percent last month.
AnnTaylor Stores Corp. reported a 13 percent gain.
Grocery Sales Fall
Those January gains were partly offset by 0.5 percent
declines in sales at grocery stores and gasoline stations --
probably because of lower commodity prices -- as well as fewer
sales at furniture stores, restaurants, and taverns. Hardware and
building material sales were unchanged from a month earlier.
''Is this the start of a slowdown in the frenetic rate of
growth of consumer spending? Almost certainly not,'' said Ian
Shepherdson, chief U.S. economist at High Frequency Economics
Inc. in Valhalla, New York. Without auto, food and energy
categories, January's retail sales rose 0.5 percent.
Auto sales rose 0.2 percent in January to $58 billion from
$57.9 billion in December, the Commerce Department said. Auto
industry figures released last week showed 15.7 million cars and
trucks sold in the U.S. in January, up 9.4 percent from the same
month last year, but down 9.3 percent from the 17.3 million sold
in December.
U.S. gasoline prices last month fell to the lowest level
since 1979 after a year-long plunge in crude oil, according to
the American Automobile Association. The average national price
of self-serve regular gasoline dropped to 97.9 cents a gallon in
January, down 4.4 cents from a month earlier, the AAA's monthly
Fuel Gauge Survey showed.
Lowest Since 1979
The last time gasoline prices were this low was in 1979,
when they averaged 96.1 cents a gallon.
Crude oil futures prices rose today after a report of a
government plan to keep some crude off the open market. The March
contract traded at $11.94 a barrel, up 19 cents, in trading on
the New York Mercantile Exchange, Since peaking Sept. 24, its
price has dropped more than 27 percent.
The Labor Department's report showed that the four-week
average for first-time jobless claims, a less volatile measure of
employment conditions, fell to 297,750 from 317,500 the previous
week -- the lowest level in more than three months.
The government's latest monthly employment statistics showed
that the nation's job market remains strong. U.S. employers added
245,000 more jobs in January, well above analysts' expectations
of a 138,000 gain, Labor Department figures showed last week. In
December, non-farm payrolls rose a revised 298,000.
At the same time, the unemployment rate once again tied a 28-
year low of 4.3 percent in January. For all of last year,
unemployment averaged 4.5 percent, the lowest since 1969.
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