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Analysis of Economic Indicators: Retail Sales and Personal Income - Essay Example

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Analysis of Economic Indicators: Retail Sales and Personal Income

The U.S. retail sales forecast from the National Retail Federation for calendar 2006 is 4.7% (NRF Forecasts 4.7% Growth for 2006 Retail Sales, 2006), more bullish than the Bloomsberg survey forecast of 3.4% for the same period (Leading U.S. Indicators Index Points to Slower Growth, 2006). Both forecasts exclude automobile sales, which has contributed to much of the recent volatility of the consumer spending and retail sales figures on a quarterly basis. The NRF press release acknowledges that pressures facing consumers include rising interest rates and diminishing sources of "spending power," by which they mean that as the housing market cools, home equity will not be able to sustain as much spending as it did in the past.
For 2005, the NRF forecast for retail sales was 5.6%, while the actual retail sales growth for 2005 was 6.1% (NRF Forecasts 4.7% Growth for 2006 Retail Sales, 2006). Bloomberg's consensus forecast for the second half of 2005 was 6.9% (U.S. ...Show more

Summary

According to Consumer Flow at Economy.com, the "fundamental drivers of consumer spending," - which generates retail sales - in the near future in the U.S. will include rising interest rates, durable goods spending, and tightening labor markets. Rising interest rates typically depress sales of so-called "big ticket items," those items usually purchased on credit, because the higher the interest rate, the higher the required payments…
Author : klockomyah
Analysis of Economic Indicators: Retail Sales and Personal Income essay example
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