On February 12, 2015 Lucia Mutikani writes on Reuters:
U.S. consumer spending barely rose in January as households cut back on purchases of a range of goods, suggesting the economy started the first quarter on a softer note.
The Commerce Department said on Thursday retail sales excluding automobiles, gasoline, building materials and food services edged up 0.1 percent last month after a 0.3 percent drop in December.
The so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
“Overall, the tone of this report was disappointing as it points to a weak start to spending activity this year, despite the significant boost to disposable income from lower gasoline prices,” said Millan Mulraine, deputy chief economist at TD Securities in New York.
Wall Street had expected core retail sales to increase 0.4 percent last month. The soft reading could see economists trim their forecasts for first-quarter GDP growth. The economy grew at a 2.6 percent annual pace in the fourth quarter.
However, inventory and trade data for December suggest growth could be revised to as low as a 1.7 percent rate.
U.S. financial markets were little moved by the data with attention focused on details of a ceasefire agreement between Russia and Ukraine and a surprise interest rate cut and bond purchasing program by Sweden’s central bank.
Despite a 39.5 percent decline in gasoline prices since June, consumer spending has been soft in the past two months. Economists say households are using the extra income to pay down debt and boost savings.
REBOUND AWAITED
Still, cheaper gasoline prices and robust employment gains are expected to provide a powerful stimulus to consumer spending and keep the economy on an expansion path, despite sputtering growth in Asia and Europe.
“Should we be worried about the weakness of underlying sales over the past two months? Possibly,” said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.
“But all the conditions are in place for a period of very strong consumption growth. We still expect to see that strength come through in the retail sales data soon.”
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, expanded at its quickest pace since 2006 in the fourth quarter and is expected to maintain a brisk pace of growth this year.
A separate report from the Labor Department on Thursday showed initial claims for state unemployment benefits rose 25,000 to a seasonally adjusted 304,000 last week, but the underlying trend remained consistent with a strengthening labor market.
Difficulties adjusting the claims data for seasonal variations have caused volatility in recent weeks.
The four-week moving average of claims, seen as a better measure of labor market trends as it irons out week-to-week volatility, fell 3,250 to 289,750 last week.
“The trend (in payrolls growth) is likely still solidly over 200,000 per month, more than strong enough to keep the unemployment rate trending down,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.
The economy has added more than a million jobs over the past three months, an achievement last seen in 1997. A key measure of labor market slack – the number of job seekers for every open position – hit its lowest level since 2007 in December.
In January, core retail sales were held back by the biggest drop in just over a year in furniture and home furnishings sales. There were declines in receipts at clothing retailers as well as at sporting goods stores, where sales recorded their biggest drop since January of last year.
Sales at online retailers and electronic and appliance stores rose last month. Declining gasoline prices undercut sales at service stations, where receipts plunged 9.3 percent, the biggest fall since December 2008.
Weaker service station receipts and a 0.5 percent drop in automobile sales pushed overall retail sales down 0.8 percent last month. It was the second straight monthly decline.
Sales for building materials and garden equipment rose last month, likely boosted by preparations for a blizzard in the Northeast. Receipts at restaurants and bars also increased.
http://www.reuters.com/article/2015/02/12/us-usa-economy-retail-idUSKBN0LG1ST20150212
Writers for the national media continue to be dumbfounded why retail sales continue to be weaker and getting weaker and why jobless claims are up. The solution should be obvious: the vast majority of Americans need a stronger source of income beyond or as a replacement for income earned from a JOB. Jobs will continue to be destroyed and the worth of labor devalued by tectonic shifts in the technologies of production and global low-wage cost development. What is needed is to reform the system to put us on the path to inclusive prosperity, inclusive opportunity, and inclusive economic justice.
Robert Reich, former Secretary of Labor and Professor, who posted this Reuther editorial continues to be oblivious to generating capital income as a stronger source of earned income and instead ONLY advocates for higher wages for people who are employed while constantly avoiding the word OWNERSHIP when he calls for a more equal distribution of “equity” and “wealth.” But NEVER does he put forth actual solutions that would broaden wealth-creating, income-producing capital asset OWNERSHIP and grow the economy, which simultaneously would result in better job opportunities.
Reich’s forward to this article said: “The only way we can have a buoyant and growing middle class is if most people get paid way more than they’re being paid today. There’s no conflict between equity and economic growth. In fact, a more equal distribution of income and wealth is essential for future growth.”
America’s economic growth is pathetic and will remain so as long as the system remains unreformed, and continue to facilitate concentrating capital ownership among a tiny minority who already OWN America.
While the rich ownership class spends money just like ordinary people, because they have more disposable income they can support purchasing finer quality products that are far more expensive than the ordinary American can afford––thus the luxury products market. But because their income exceeds even the cost of their wants and desires for luxury products, they constantly re-invest and further grow their capital asset portfolios, which in turn produces even more income, which then again is re-invested. This cycle is perpetrated over and over again. They effectively use savings derived from their withholding of further consumption (because they already have purchased what they want). The system requires savings or withholding from consumption as equity asset security is pledge to finance the formation of new capital assets or to speculate in the trading of stock, which represents the asset value of the capital assets of corporations, to realize capital gains. Yet trading secondary stock does not grow the economy, only investing in the formation of new capital assets grows the economy and results in job creation and wage boosts for the masses, who in turn spend to consume more products and services, causing demand for further growth.
The problem is the wealth-building system is restricted to those with past savings due to withheld consumption. Equal opportunity to finance and acquire newly formed wealth-creating, income-producing capital assets is non-existent. Yet, those educated in capital asset acquisition know that capital acquisition takes place on the logic of self-financing and use their asset-backed (savings) credit for productive uses.
People invest in capital ownership (i.e. land, structures, tools, machines, robotics, super-automation, computerization, software programs, etc, used to produce products and services) on the basis that the investment will pay for itself. This reality is the reason the system needs to be reformed to provide ordinary Americans, without savings, access to insured, interest-free capital credit to acquire new capital assets that grow the economy. The basis for the commitment of loan guarantees (insurance) is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one unless he or she is first assured, on the basis of the best advice one can get from company management and banks, that the asset in operation will pay for itself within a reasonable period of time––5 to 7 or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income for its owner indefinitely with proper maintenance and with restoration in the technical sense through research and development.
Still, there is at least a theoretical chance, and sometimes a very real chance, that the investment might not pay for itself, or it might not pay for itself in the projected time period. So, there is a business risk, which can be absorbed by capital credit insurance or commercial risk insurance. Thus, in order to achieve national economic democracy, we need a way to handle risk management in finance by broadly insuring the risks. Such capital credit insurance would substitute for the past savings (equity) security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital.
One feasible way is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
Once people become educated about this opportunity, EVERY American will want to participate, especially since their participation requires no loss of their wage income or benefits and the new, economy-expanding capital asset investments are insured. That to me is a no-brainer. I never met a person who owns income-producing capital assets that said “I hate capital income.
Everyone, generally, is interested in having a decent lifestyle, but the reality is they are restricted to the extent of the income they produce. We all have wants and desires for finer quality products, travel, better education for our children, etc, etc., etc., but without the necessary income these are just that, unfulfilled wants and desires, and always will be.
Furthermore, the wealth-building programs I am advocating do not deny people the opportunity to work. In fact, they provide far more REAL job opportunities than our current anemic economy does, as investment in growth results in our building a future economy, which is broadly owned by the citizenry as individuals, that can support general affluence for EVERY child, woman, and man. The short-term result will create massive new job opportunities as this new economy is being built.
How we get to build this “affluence-for-all” future economy is already figured out. If the author of this articles and Reuthers as well as academia and the politicians really want America and all of its citizens to succeed and create a new inclusive economy that can support general affluence for EVERY child, woman and man, they ALL and you, the reader, should be advocating the call for “Every Citizen An Owner” and support the proposed Capital Homestead Act, the Just Third Way, and Monetary Justice.
If you agree, then step us and support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice
Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.