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US Shows Weak Retail Sales
Nov 05, 2007

Retail sales in the US are declining because of slow approach of the fall season and consumers’ less purchasing power due to rise in unemployment, reduction in payrolls and wages etc.

A
s per a trade group, International Council of Shopping Centers, in September 2007, the retail sales in US increased by only 1.7% at the stores- the weakest during September 2002 to 2007, as published by Nytimes. Consequently, over 12 retailers have reduced their earning predictions of the time period spanning from October 2007 to December 2007.

As per Paralytics, the weather-tracking firm, two- third of the eastern US showed two to six degrees more temperature than the usual in September 2007. Due to the rise in temperature, less people went out for shopping, and those who shopped delayed buying winter apparels like sweaters, coats, scarves etc. This affected the seasonal clothes’ companies.

The temperatures are cooling now but this is not likely to bring about the economic growth before the fall season that is expecting to show the slowest growth pace ever since 2002.

Americans are urged to spend less on building materials, appliances and furniture because of the declining property value and home purchase. Other factors showing such pessimistic picture of the market are the September 2006’s strong showing in the market, and also the rigid credit market that resulted in comparatively weak performance in 2007. The increase in unemployment, and decrease in payrolls and wages also contributed to fall in consumer spending.

According to the industry analysts, the delayed credit squeeze as well as housing slump is going to cut down the costs in coming months, implying sluggish consumer spending and hiring. The policy makers of the Federal Reserve cut down the standard interest rate in order to prevent the slump in the economy on September 18, 2007. They do not believe that the economic growth would decline, and so indicated that they won’t be cutting down the rates any more.

As per a Research Expert at RNCOS, “Various factors are responsible for the slow growth of the US retail sales. One of the chief reasons behind the sluggish growth is the bad weather, but this seems a temporary reason. Due to the approaching holiday season of festival, the retailers are still hoping and are planning to give discounts on some commodities in an effort to lure the customers into spending more”.

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