Ahead of the bell

Retail sales

[February 04, 2010]  WASHINGTON (AP) -- Retail sales likely posted a gain in December as the holiday shopping season ended on a slightly stronger note.

The consensus view of economists surveyed by Thomson Reuters is that retail sales rose 0.5 percent in December, after rising 1.3 percent in November. Excluding autos, sales were up 0.3 percent last month, according to the forecast. The report will be released by the Commerce Department at 8:30 a.m. Thursday.

A gain of that magnitude would lend support to the view that consumers may finally be willing to start spending again, a development viewed as crucial to keeping the current economic recovery on track.

Last week, the nation's big retail chains reported that a surge of last-minute holiday shopping helped them enjoy at least modest sales gains in December, a big improvement from the disastrous sales they had experienced in December 2008.

Even with that strength in December, however, retail sales dropped for the entire year by the largest amount in four decades, according to data compiled by the International Council of Shopping Centers. That data showed sales up 2.8 percent in December compared with a year ago but down by 2 percent for all of 2009.

The weakness over the year reflected the battering that consumers have taken from the worst recession since the Great Depression, a downturn that has cost 7.2 million jobs and left households trying to rebuild savings depleted by losses on Wall Street and a crash in housing prices.

Consumer spending is closely watched since it accounts for 70 percent of total economic activity. Economists are hoping that the gains in consumer demand seen in recent months can be sustained. But they remain cautious in that view given that unemployment, currently at 10 percent, is not expected to peak until perhaps midyear.

The overall economy, as measured by the gross domestic product, grew at an annual rate of 2.2 percent in the July-September quarter and many economists believe that growth strengthened even further in the final three months of last year. However, the worry is that GDP will slow significantly in the early part of 2010 unless consumers continue to spend.

For December, a diverse group of retailers including Costco Wholesale Corp., Target Corp., Macy's Inc. and TJX all reported sales increases. Luxury stores like Saks Inc. and Nordstrom also saw strong December sales gains and even Sears Holdings posted a small gain on rising sales at its Kmart chain.

Also helping to support retail spending in December was a hint of better days ahead for the battered auto industry. Automakers in the U.S. ended their worst year in almost three decades in December with slight improvements, led by gains in sales of small cars.

[Associated Press]

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