Consumer credit went down 1.5% in May, marking the 4th consecutive decline. Retail sales were down once again, with high end retailer Abercrombie & Fitch facing a 32% decline in sales. Nonetheless, lower end retailers experienced some sales growth. Click here to see WSJ article.
Although deleveraging is good for the American consumer in the long run, the lack of credit availability continues to hurt the retail sector in the short term. As a result of the decline in sales, the sector is likely to continue to generate job losses that may spread to other sectors of the economy that provide goods and services to retailers. Firms currently serving the retail sector, such as those in the technology industry, should shift their marketing efforts to target government spending. Those able to benefit directly or indirectly from the economic stimulus package will be the survivors in the long run.
What do you think these measures of economic performance by the retail sector mean for the overall US economy; and specifically, the labor market currently facing unemployment of 9.5%?
On a more positive note, the Red Sox won against Oakland and the Celtics gave Rasheed Wallace a 3-year deal! Read more about NE sports.
