Poor retail sales hint at slowdown: this week in the economy
Retail sales rose 0.2 percent in August, half the rate analysts expected. Consumer sentiment falls, mortgage rates rise, and Obama administration denies report that it has picked a new Fed chairman.
Retail sales underwhelm: Retail sales rose 0.2 percent in August, according to the US Commerce Department. Analysts had expected 0.4 percent growth for the month. Core sales (excluding autos, building materials, and gasoline) also grew 0.2 percent for the month.
Despite the underwhelming report, retail sales have risen 13 of the past 14 months, and analysts guess that retail sales won’t have much of an impact on the Federal Reserve’s decision whether to scale back its stimulus efforts in the coming weeks. "A smaller than anticipated increase in retail sales in August adds to evidence that the US economy is likely to have slowed in the third quarter, but the recovery nevertheless continues, suggesting the Fed remains on course to start tapering its stimulus next week,” Markit chief economist Chris Williamson wrote via e-mailed analysis.
Consumer sentiment tumbles: Americans’ feelings about the economy were the dreariest since April, according to the latest monthly read of the University of Michigan’s Consumer Sentiment Index. The index fell 5.3 points in mid-September. Consumers’ outlook on current conditions fell 3.4 points, while the index measuring their overall economic outlook fell 3.4 points. “This is not a good report,” MFR, Inc. economist Joshua Shapiro wrote in his e-mailed analysis of the release. “It is very obvious that Americans are still cautious and their mood has soured recently.”
JOLTS show increased hiring, but fewer job openings: The Job Openings and Labor Turnover Survey (JOLTS) from the US Labor Department found that job openings fell by 180,000 in July, to 3,689,000 openings. However, hiring rose by 101,000 in July to 4,419,000, leaving the hiring rate unchanged at 3.2 percent.
Mortgage rates on the rise: Mortgage rates rose seven basis points last week, bringing the average interest rate for a 30-year fixed rate mortgage up to 4.68 percent.
Jobless claims dip, but there’s a glitch: The number of people applying for initial unemployment benefits appeared to fall to a seven-year low last week, but the numbers weren’t certain because two states had trouble processing their filings. The Labor Department wouldn’t say which two states had the issue.
Summers as Fed Chief? Not yet, despite report: The Obama administration has denied a report from the Japanese newspaper Nikkei that former Treasury secretary and Harvard president Larry Summers has been named the next Federal Reserve chairmen. Mr. Summers is the presumed front-runner to assume the post once current Fed chief Ben Bernanke’s term is up in January, but he’d be a controversial pick – many Democrats are wary of Summers for his role in easing banking regulations in the mid-1990s as President Clinton’s Treasury secretary, and he ruffled feathers at a Harvard speech in which he suggested that the dearth of women in science and engineering fields was due to a “different availability of aptitude.”
The Nikkei report claims that President Obama will announce Summers as Fed chief sometime next week, but the White House says the president has yet to make his pick.