Economy Watch: Consumers in a Buying Mood
Retail sales came in strong in March; home prices have yet to find their bottom; and members of Congress continue their bickering without reaching a budget agreement.
In a spot of good news for the economy, retail sales were in gear in March, according to data compiled by Thomson Reuters and released on Thursday. That came as a surprise to many observers, who had predicted that a late Easter and rising gas prices would cause retail sales to contract last month.
The Thomson Reuters survey of 25 major retail chains put their average retail sales up 1.7 percent year-over-year, with top performers including Limited Brands, up 14 percent; Costco Warehouse Corp. scoring a 13 percent increase; and Saks Inc. gaining 11.1 percent. Not all retailers had a good March, however. Gap Inc. saw sales drop 10 percent compared with last year, while Kohl’s Corp. and Target Corp. saw declines of 6.5 percent and 5.5 percent, respectively.
Also in retail news on Thursday, Dish Network won bankruptcy court approval to acquire the on-the-rocks video rental chain Blockbuster Inc. for $320 million. Why the satellite broadcaster would want Blockbuster is another question, one not entirely answered by Dish Network. “Blockbuster will complement our existing video offerings while presenting cross-marketing and service-extension opportunities for Dish Network,” Tom Cullen, a Dish Network executive vice president, says in a vague statement.
Home prices slip again
CoreLogic said on Thursday that its index of U.S. home prices was down by 6.7 percent in February 2011 compared to February 2010, after declining by 5.5 percent in January 2011 compared to January 2010. Unsurprisingly, foreclosures and short sales were leading the downward charge in prices. Without the sale of these kinds of distressed properties factored in, year-over-year prices declines were 0.1 percent in February.
Most markets experienced price declines since both last month and last year. But not all. Including distressed sales, the five states with the greatest appreciation year-over-year were West Virginia (up 5.4 percent), New York (up 4.7 percent), North Dakota (up 4.1 percent), Maine (up 3.6 percent) and Alaska (up 1.2 percent).
The national peak-to-current decline in home prices–that is, just how far the bubble has deflated since the heady days of April 2006–was 34.5 percent. That figure includes distressed sales. Exclude distressed sales and the peak-to-now decline in U.S. home prices was 21.7 percent.
Countdown to shutdown
As of late Thursday night and early Friday morning, there had been more jawboning and arm-twisting about the budget, but no word of an agreement or even a notion to kick the can down the road some more, even though the can is right in front of the negotiators now and could stand some further kicking. The federal government is poised for its first shutdown in 15 years come Saturday.
Wall Street seemed a bit nervous about the shutdown, or maybe it was a new tremor in Japan, or possibly the increasing price of oil. In any case, the Dow Jones Industrial Average was down a slight 17.26 points on Thursday, or 0.14 percent. The S&P 500 lost 0.15 percent, and the Nasdaq was down 0.13 percent.
