By Shobhana Chandra
Nov. 14 (Bloomberg) -- Sales at U.S. retailers probably fell in October by the most since the 2001 recession, pushing the economy toward the worst slump in decades, economists said before a report today.
Purchases fell 2.1 percent, the fourth consecutive decrease and the biggest since November 2001, according to the median estimate in a Bloomberg News survey. Excluding autos, the decline in sales may also be the largest in seven years, the survey said.
Spending may continue to falter as mounting job losses, plunging stocks and falling home values leave household finances in tatters. Retailers from Best Buy Co. to Nordstrom Inc. are cutting revenue forecasts ahead of what may be the worst holiday shopping season in six years.
``October was terrible for retail, November will also be terrible, and December won't be good,'' said Markus Schomer, global economic strategist at AIG Global Investment Group in New York. ``Consumers are reacting to the loss of wealth from housing and stocks and insecurity about jobs.''
The Commerce Department's sales report is due at 8:30 a.m. in Washington. Forecasts of the 73 economists surveyed ranged from a gain of 1.4 percent to a decline of 6 percent. Sales dropped in July, August and September, the first time since records began in 1992 that purchases fell three months in a row.
Purchases of expensive goods are taking the biggest plunge as banks turn borrowers away. Sales of cars and light trucks last month were the worst since February 1983, Autodata Corp. reported. Purchases sank 45 percent at General Motors Corp., the largest U.S. automaker.
Treasury Assistance
Treasury Secretary Henry Paulson this week said the government will shift the focus of the second half of the $700 billion rescue plan from buying mortgage assets to unclogging consumer credit. President-elect Barack Obama and Democrats in Congress are under pressure to push through another stimulus plan even before the new administration takes over.
Excluding car dealers, retail sales probably decreased 1.2 percent last month, the survey median showed.
At 10 a.m., the Reuters/University of Michigan preliminary November consumer sentiment index is projected to fall to 56.2, the lowest level since 1980, according to the survey.
Also today, a Labor Department report at 8:30 a.m. may show the cost of imported goods fell a record 4.4 percent in October, reflecting the plunge in commodity costs, the survey showed.
'Seismic Changes'
``Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we've ever seen,'' Brad Anderson, chief executive officer of Best Buy, said in a Nov. 12 statement.
The Richfield, Minnesota-based electronics chain said sales in the four months through February 2009 will decline more than it previously estimated. Rival Circuit City Stores Inc. filed for bankruptcy protection this week.
Macy's Inc., Target Corp. and Gap Inc. were among the chains that reported same-store sales dropped in October, while shoppers searching for discounts on groceries gave sales a lift at Wal- Mart Stores Inc., the world's largest retailer. Nordstrom yesterday cut its profit forecast for the third time this year.
The International Council of Shopping Centers has forecast the November-December holiday season will be the worst since 2002.
Shoppers are pulling back as the labor market slumps. The unemployment rate jumped to 6.5 percent in October, the highest level since 1994. Employers cut more than a half million workers from payrolls in the past two months.
The longest expansion in consumer spending on record ended last quarter, causing the economy to shrink at a 0.3 percent annual pace.
The economic slump will intensify this quarter and persist into the first three months of 2009, making it the longest downturn since 1974-75, economists forecast in a Bloomberg survey conducted from Nov. 3 to Nov. 11.
Bloomberg Survey
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Retail Retail ImportU of Mich
Sales ex-autos Prices Conf.
MOM% MOM% MOM% Index
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Date of Release 11/14 11/14 11/14 11/14
Observation Period Oct. Oct. Oct. Nov. P
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Median -2.1% -1.2% -4.4% 56.2
Average -2.1% -1.3% -4.4% 56.5
High Forecast 1.4% 0.3% -0.4% 61.0
Low Forecast -6.0% -2.5% -7.0% 51.9
Number of Participants 73 70 48 64
Previous -1.2% -0.6% -3.0% 57.6
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4CAST Ltd. -2.6% -2.1% -5.0% 58.0
Action Economics -1.8% -1.2% -7.0% 56.0
Aletti Gestielle SGR -2.4% -0.1% --- 56.0
Ameriprise Financial Inc -1.8% -1.0% -3.5% 56.0
Argus Research Corp. -0.6% -0.5% -1.0% 55.0
Banc of America Securitie -3.2% -2.5% --- ---
Bank of Tokyo- Mitsubishi -2.4% -1.4% -5.0% 60.0
Bantleon Bank AG -1.6% -1.0% -4.2% 57.0
Barclays Capital -2.3% -1.5% -4.5% 56.0
BMO Capital Markets -2.5% -2.0% -4.4% 55.5
BNP Paribas -2.0% -0.6% -1.0% 57.3
Briefing.com -1.2% -0.8% --- 58.5
Calyon -1.9% -1.2% --- 56.0
CIBC World Markets -2.5% -2.0% -5.0% 56.0
Citi -2.1% -0.9% -3.8% 60.0
Commerzbank AG -2.2% -1.0% --- 57.0
Credit Suisse -2.0% -1.1% -4.0% 60.0
Daiwa Securities America -1.2% -1.2% --- 53.0
Danske Bank -2.5% -1.3% --- 56.3
DekaBank -2.5% -1.8% -4.4% 58.0
Deutsche Bank Securities -2.5% -2.0% -4.5% 52.0
Deutsche Postbank AG -2.0% -1.0% -3.5% 56.0
Dresdner Kleinwort -2.1% -1.2% -5.3% 58.0
DZ Bank -1.4% -1.0% -3.5% 55.0
First Trust Advisors -2.2% -1.0% -4.4% 55.0
Fortis -3.0% --- --- 57.0
FTN Financial -3.0% -2.2% --- 54.0
Goldman, Sachs & Co. -2.3% -1.3% --- ---
Helaba -1.7% -1.2% --- 56.0
Herrmann Forecasting -2.8% -1.9% -4.6% 54.9
High Frequency Economics -3.0% -2.2% -7.0% 60.0
Horizon Investments -1.5% -0.5% -4.0% 57.0
HSBC Markets -1.8% -1.2% -5.6% 57.0
IDEAglobal -0.8% -0.6% -2.8% 55.0
IHS Global Insight -3.0% -2.3% --- 57.0
Informa Global Markets -2.0% -1.4% -4.2% 58.0
ING Financial Markets -2.1% -1.2% -7.0% 52.0
Insight Economics -1.8% -1.0% -4.5% 55.0
Intesa-SanPaulo -2.0% -1.5% -4.5% 55.0
J.P. Morgan Chase -2.2% -1.7% -5.0% 58.0
Janney Montgomery Scott L -3.4% -2.5% -6.0% ---
JPMorgan's Private Wealth -1.3% -0.9% --- 57.9
Landesbank Berlin -6.0% -1.7% -0.4% 58.5
Landesbank BW -1.6% --- -3.5% 53.0
Lloyds TSB 0.3% --- -2.0% 55.0
Maria Fiorini Ramirez Inc -2.5% -1.5% -4.5% 58.0
Merk Investments -1.2% -1.0% -4.0% 55.0
Merrill Lynch -2.8% -1.9% -5.4% 58.0
Moody's Economy.com -2.3% -1.2% -3.8% 60.0
Morgan Keegan & Co. -2.2% -1.9% --- ---
Morgan Stanley & Co. -1.8% -1.5% --- ---
National Bank Financial -4.5% -2.5% --- 57.0
National City Corporation -1.1% -0.8% -3.4% 58.0
Natixis -3.0% -1.0% --- 55.5
Newedge -1.5% -0.7% --- 55.0
Nomura Securities Intl. -2.3% -1.2% --- ---
Nord/LB -1.5% 0.3% -6.0% 54.0
PNC Bank -2.0% -0.6% --- ---
RBS Greenwich Capital --- --- --- 55.0
Ried, Thunberg & Co. -3.0% -1.9% -4.0% 58.0
Schneider Trading Associa -2.2% -1.4% -6.1% 59.0
Scotia Capital -2.8% -2.0% -3.0% ---
Societe Generale 1.4% -0.9% --- 57.0
Standard Chartered -2.8% -2.0% --- 51.9
Stone & McCarthy Research -1.6% -1.0% --- ---
TD Securities -2.0% -1.0% --- 53.0
Thomson Financial/IFR -1.6% -0.9% -3.0% 56.0
UBS Securities LLC -2.8% -1.9% -3.5% 59.0
University of Maryland -2.5% -0.8% -5.1% 54.0
Wachovia Corp. -2.0% -1.2% -6.4% ---
Wells Fargo & Co. -1.8% -1.2% -7.0% 56.0
WestLB AG -1.5% -1.0% --- 59.0
Westpac Banking Co. -3.0% -1.5% -6.2% 61.0
Wrightson Associates -3.0% -1.9% -4.0% 58.0
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To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
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