Chain store sales remained weak last week, judging by the latest weekly
data from the International Council for Shopping Centers. On a
year-over-year basis, chain store sales were up just 1.0% in the week
ended Saturday, down from 1.6% the previous two weeks. That's the weakest reading since June 2003.
A normal reading would be closer to 3.5% to 4.0%, so it is obvious that consumer spending remains very weak. To identify the foundation of an economic recovery, spending levels must start to outstrip production. When that happens, production cycles will have shifted from a vicious self-feeding negative cycle of decreases in production, income, and spending, to a virtuous one that self-feeds in the opposite direction.
In the context of the recent rally in share prices and the contraction
in credit spreads, today's news serves as a reminder of the minefield of
bad economic news that waits and the risks for a consolidation of market
gains.
Tony Crescenzi Blog Credit Spreads Tighter 3/24/2008 1:56 PM EDT The steadiness at lower levels is encouraging.
Tony Crescenzi Blog Dow Hits Key Fibonacci Level 3/24/2008 12:32 PM EDT Exactly 38.2% of the losses have been retraced.
Tony Crescenzi Blog Housing Inventory Figures Shrinking -- As Suspected 3/24/2008 11:04 AM EDT If the housing supply can keep shrinking, this crucial part of the economy could spring back to life later this year.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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