It was reported that December’s consumer confidence level of 60 was something to be positive about. But the index wasn’t all that saw an increase, as a monthly survey conducted by the Conference Board revealed that more shoppers also believed business conditions were good, with 16.6 percent responding positively, compared with November’s 13.9 percent. How is this increase in consumer confidence actually affecting shopping habits? According to a report on Bloomberg.com, “Sales at U.S. retailers probably increased in January by the most in four months.” In fact, the Commerce Department confirmed on Tuesday that there was 0.4 percent gain in retail receipts, less than the projected 0.8, but an increase compared to the 0.1 percent advance in December.
Economy and Retail Gain Momentum
All in all, the economy seems to be turning around and much in the favor of retail operators. Some of the contributing factors according to Bloomberg.com include, “The drop in unemployment to a three-year low, evidence of an improving job market that’s essential to sustaining purchases.” Job growth has caused less apprehension in customer purchases, including big-ticket items. In effect, these gains in consumer and business spending have caused an increase in inventory replenishment as retailers and suppliers look to meet the demand of their customers. Business inventories, in fact, climbed 0.4 percent in January, a 0.1 percent increase from the prior month’s gain.
It is forewarned, however, that economists are worried that a recent increase in gasoline prices, could negatively affect spending in the months ahead. As Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, NC, states in a recent Reuters article, “The rise in gasoline prices will likely take a toll on spending in coming months unless income growth improves.” Still, the retail sales report adds to a recent run of fairly upbeat economic data, which some analysts say reduce the need for the Federal Reserve to ease monetary policy further, according to Reuters. With so many upward trends, “It’s hard to argue against the case that the U.S. economy is gaining momentum,” says Millan Mulraine, a senior U.S. strategist at TD Securities in NY to Bloomberg.com.