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Economic Indicators


It is said that the only way to get a unanimous opinion from a group of economists is to limit the group to one person. Economists are notorious for being unable to achieve consensus regarding where we stand now, let alone where the economy is headed.

This year, however, retailers have more to worry about than La Niña. The uncertainty caused by the global economic crisis is casting a cloud over the robust American economy, and retailers are bracing for a tough quarter. October sales among major retailers, though within the anticipated growth rate range of 3-6%, are cause for pessimism among analysts because October sales grew just 3.6% over the same period last year. October sales are considered a good barometer for predicting holiday sales, so by this measure, one should expect little growth over last year for holiday sales as well.

Another way to predict holiday sales volume is to look at major economic indicators such as unemployment and interest rates. By this measure, holiday sales should be fairly brisk. The Federal Reserve has lowered interest rates three times in the past several weeks, reducing the rates consumers must pay on new car loans and credit card debt. Since sales of new cars make up a large component of overall retail sales, reduced interest rates are likely to spur additional sales, thereby improving the retail picture.

Unemployment remains low, as well, which means that people have money to buy things, so we should therefore be optimistic about holiday sales. However, layoffs have skyrocketed in industries ranging from financial services to petroleum. Because layoffs cause economic uncertainty about the future, consumers who lose their jobs tend to postpone purchases, which would again cloud the sunny picture for holiday sales.







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