Retailers Failed to Lure Consumers in March, as Job Losses Mounted!!!

Daily Forex Fundamentals | Written by ecPulse.com | Apr 14 09 14:37 GMT |

Incoming data from the U.S. economy continues to signal that we are still far from recovery, despite that the Federal Reserve Chairman Bernanke is optimistic over the outlook, as he believes that the recent signs from the housing and spending sectors are starting to show some bottoming and that would mark the first step towards recovery. On the other hand the Chairman of the Federal Reserve Bank of Dallas Richard Fisher is being more pessimistic, as he expects the world's largest economy will contract beyond the contraction seen during the last three months of 2008, the U.S. economy contracted by 6.3 percent. Fisher believes that rising unemployment will continue to suppress economic growth in the United States, as Fisher signaled that unemployment might rise above 10 percent this year, the unemployment rate surged in March to the highest level since 1983 at 8.5 percent. Rising unemployment, tightened credit conditions, falling stocks, and declining home values continue to weigh down on economic growth in the world's largest economy amid the worst financial crisis since the Great Depression. Meanwhile data released today continued to signal the persistent weakness in economic activity, as retail sales dropped in March by 1.1 percent following the prior revised rise of 0.3% and well below median estimates of a drop by 0.15, meanwhile retail sales that exclude autos also declined in March by 0.9% following the prior revised estimate of 1.0% and well below median estimates for a flat estimate. Consumers are still hammered by worsening economic conditions and rising unemployment, as apparently retailers failed to lure consumers through discounts and accordingly the worst is still not over, as we might witness further deterioration over the course of this year. Meanwhile the producer price index signaled worrying figures, as the PPI dropped in March by 1.2% following the prior rise of 0.15 reported back in February and well below median estimates of a flat reading, while compared with a year earlier PPI fell 3.5% following the prior drop of 1.3% and well below median estimates of a 2.2% drop. Core PPI was flat in March also below median estimates of a 0.1 percent rise and below the prior reported rise of 0.2%, while compared with a year earlier core PPI rose 3.8% down from the prior and expected rise of 4.0 percent. Downside risks to inflation continue to threat the world's largest economy with deflation, though we are still not there yet, but the fact that deflation might materialize could prove to be challenging, and might indeed lead the Fed to expand its quantitative easing beyond the current $300 billion. The Fed decided to start quantitative easing after monetary policy measures failed to revive lending or economic growth, and accordingly the Fed needed to undertake more drastic and unorthodox measures in a bid to reduce long term interest rates and implicitly fight deflation. Tomorrow the consumer price index should provide further hints on inflation, but seemingly the ongoing recession has managed to suppress prices so far, and should that prove to be an ongoing trend, deflation might become a reality rather than a concern. Meanwhile stock markets declined in today's early trading session on the downbeat data, as the DJIA declined by 75.11 points or 0.93 percent and was last trading at 7982.70, while the S&P 500 index declined by 7.31 points or 0.85% and was last trading at 851.42, and the NASDAQ Composite index declined by 11.33 points or 0.69% and was last trading at 1641.98, data as of 10:23 New York time. Stock markets are expected to fluctuate heavily throughout this week, as a number of companies including JPMorgan Chase and Citigroup will announce their first quarter results and accordingly investors should be careful, as the worst might not be over yet!!! Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk