Strong retail sales results this morning indicate that the country could be more recession-resilient than many economists had feared. Jobs are still hard to come by, but employment tends to lag in a recession, while sales numbers can tell a more current story. And for the moment, sales figures are indicating that Americans are willing to spend money, albeit cautiously. Retail sales rose 1.1% in September, the Commerce Department said, and the agency revised its August estimate up to 0.3% growth from a flat reading.
“We estimate that real personal consumption expenditure (PCE) growth in the third quarter is likely to come in around 2% – 21⁄4% versus a second-quarter reading of around 0.7%,” wrote John Ryding and Conrad DeQuadros of RDQ Economics. “Such a gain should underpin domestic demand growth at around 2% and, with a small addition to growth from trade, put real GDP growth at a little bit above 2%not great, but a far cry from a renewed recession.”
Consumer sentiment data for October also came out this morning, and it was disappointing, coming in at 57.5 versus 59.4 in September. Consumer expectations index fell to 47 from 49.4. Investors appear willing to ignore that, as the Dow is still up 100 points.
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