Last week’s devastation in the US had an adverse effect on spending by American consumers.
The Redbook retail sales average for chain stores dropped 3.2% over the first two weeks of the month, below the target of flat growth. Such findings were echoed by the Bank of Tokyo-Mitsubishi and UBS Warburg’s chain store sales index, which registered a drop of 1.4% in the week to September 15, far greater than the 0.1% fall the week before.
Commented Mike Niemera, a senior economist at BT-M: “Clearly the week took a hit on sales and took a hit on traffic. It probably means the month is going to come in a lot weaker than previously anticipated.”
Consumer spending makes up around two-thirds of US economic growth, and has been the major factor in keeping a weak economy out of recession in recent months [WAMN: 11-Sep-01]. However, some analysts fear retail sales will remain weak for the next four quarters due to deflationary pressure on retailers.
Another concern is that the effects of the $38 billion in tax rebates issued since July – which analysts hoped would boost the economy – may be lost if Americans spend more cautiously following last week’s attacks.
BT-M now forecasts a 1.5%–2% year-on-year growth in sales for September as a whole, much less than previous predictions of 3%.
News source: New York Times