Economic data is weak

By Jan Teague, President/CEO
Washington Retail Association

Today the Wall Street Journal reported better than expected retail sales results for June. There are two types of consumers who continue to fuel retail sales – those who shop high end and those who shop with discount stores.

Consumers who used to shop in the middle markets are holding their cash or spending it with the discounters. These results continue to describe a weak economy with the stresses in the economy not being revealed in the aggregated sales average for June.

Therein lies the problem with most of the data we read right now. We are looking at numbers that don’t show the true nature of the economy. The jobs data for June indicates that job growth was up over projections, but it doesn’t tell you that our young people can’t find jobs and are living at home. The unemployment rate has improved, dropping to 8.2 percent, but it doesn’t tell you that many more have stopped looking for work, that 20 percent could work but are not employed and that 35 percent of the population is receiving government assistance that is creating a huge liability for taxpayers.

Consumer spending remains weak overall. It will likely not see a sustained improvement until the job market improves and the European economy stabilizes. Consumer confidence tumbled in June to its lowest level since last December. The news reports influence this by showing the Presidential candidates arguing that the other candidate is a choice for disaster. The consumer doesn’t know what to think. And, if they are reading what the economists as well as the International Monetary Fund are reporting, the news from their corner is that Congress must reach an agreement on the tax increases and spending cuts or they will push the economy off a “fiscal cliff” and back into an official recession.

Improvement to a pre-recession economy will take years. Everyone seems to be agreeing with this observation even if they have seen a recent optimistic report that the economy is doing better.