Consumer Spending Turns Hazy
The outlook for consumer spending turned hazy Thursday as warnings of weak sales ahead overshadowed better-than-expected March sales at many of the nation's big retailers.
Analysts said rising gasoline prices and the possibility of higher interest rates could lead shoppers to curtail their spending in the coming months. And Wal-Mart Stores Inc., whose customers cut back on shopping when gas prices were high last year, warned that April's selling environment will be tough, while Federated Department Stores Inc. said its first-quarter sales will come in at the low end of expectations. Cooler weather in recent days has stifled sales of spring clothing. And the slowing economy, particularly the weakening housing market, could challenge shoppers in the coming months.
An immediate concern is rising gas prices. Gas and oil climbed Wednesday and Thursday after the government reported a steeper-than-expected decline in gasoline inventories, and there are predictions of $3-a-gallon gasoline by summer. Meanwhile, minutes from the Federal Reserve's most recent meeting showed the central bank is not ruling out an interest rate hike to contain inflation. Higher rates mean consumers will be paying more on their credit card balances, and they can further hurt the already weak housing market.
One of the big pillars for consumer spending has been the solid job market. The Labor Department reported earlier this month that employers added 180,000 jobs in March; the unemployment rate slipped to 4.4 percent, matching a five-year low. But that could weaken if the housing market continues to slump, Perkins said.
Analysts said rising gasoline prices and the possibility of higher interest rates could lead shoppers to curtail their spending in the coming months. And Wal-Mart Stores Inc., whose customers cut back on shopping when gas prices were high last year, warned that April's selling environment will be tough, while Federated Department Stores Inc. said its first-quarter sales will come in at the low end of expectations. Cooler weather in recent days has stifled sales of spring clothing. And the slowing economy, particularly the weakening housing market, could challenge shoppers in the coming months.
An immediate concern is rising gas prices. Gas and oil climbed Wednesday and Thursday after the government reported a steeper-than-expected decline in gasoline inventories, and there are predictions of $3-a-gallon gasoline by summer. Meanwhile, minutes from the Federal Reserve's most recent meeting showed the central bank is not ruling out an interest rate hike to contain inflation. Higher rates mean consumers will be paying more on their credit card balances, and they can further hurt the already weak housing market.
One of the big pillars for consumer spending has been the solid job market. The Labor Department reported earlier this month that employers added 180,000 jobs in March; the unemployment rate slipped to 4.4 percent, matching a five-year low. But that could weaken if the housing market continues to slump, Perkins said.
Labels: consumer spending, FD, Oil, WMT
posted by Stock Administrator @ 10:46 AM
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