Chain Stores Post Solid January As Double-Dip Fears Ebb
Retailers continued their steady climb in January, in what one economist said lead to the end of fears of a double-dip recession.
Chain stores reported a 4.2 percent increase in sales over last January, beating Wall Street expectations of 2.7 percent, Reuters reported. The news comes on the heels of a solid holiday season for the retail industry, which posted the sixth straight month of growth in December.
Along with Labor Department figures that show new weekly unemployment claims were down just over 9 percent in the week which ended January 29, the figures paint a picture of a slow, but noticeable economic recovery.
"You are seeing job growth coming back, you are seeing equities markets rallying for the most part, and that's translated into stronger confidence and stronger consumer spending," said Jennifer Lee, senior economist at BMO Capital Markets. "I wouldn't say [consumer spending] was returning with a vengeance, [but] people are feeling more confident about the economy and their financial situation."
Consumer spending represents approximately 70 percent of the U.S. economy. Paired with a measure that will allow businesses to write off the cost of buying new machinery and equipment passed in as part of the Obama Administration's tax bill in December, Lee said she expected the the U.S. economy grow 3.2 percent in 2011.
But, Lee said, it won't be clear sailing all the way. "You still have very high unemployment, we need to chip that down to boost consumer spending, you still have a hugh housing overhang which is weighing on the overall economy as well, but I don't think anyone's seeing double dip anymore."
Apparel stores and some discounters saw some of the biggest sales increases in the Thomson Reuters index. Victoria's Secret parent company Limited Brands, which also owns Bath and Body Works and lingerie store La Senza, led the way, with sales 24 percent over last January.
Sales at Gap and high-end clothier Nordstrom also grew, 1 and 4.8 percent respectively. Bulk retailer Costco saw gains as shoppers looked for savings, with sales increasing by 9 percent, Reuters reported.
Thomson Reuters same-store sales index polled companies Wall Street analysts to come up with expected figures, then compared these with January sales figures from 28 chains stores.