Retail Sales Slip, Thanks to Cash for Clunkers
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Despite positive earnings from Wal-Mart, the retail sector is not particularly happy right now. This is because July’s retail sales report has been released, and it is not nearly as good as hoped. In fact, retail sales slipped in July. And one of the culprits being blamed is the Cash for Clunkers program.
Indeed, some lament that Cash for Clunkers siphoned sales away from retailers. MarketWatch reports on this sentiment:
“All the cash-for-clunkers [program] did was steal sales from other retailers. We’d argue that even more damage was done, as consumers who did turn in their clunkers likely surrendered assets with at least some residual value for debt and an equity stake in a sharply deteriorating asset,” said T.J. Marta, chief market strategist, Marta on the Markets LLC.
While there was some Cash for Clunkers stimulus, it didn’t really show up for most of the retail sector. And that caused some disappointment, leading to a drop on the stock market after a higher open. Stocks are collectively higher right now, but not by much. Yesterday’s enthusiastic rally is not likely to be repeated today.
Another issue that had an impact on retail sales last month is the fact that consumers are becoming more conscious of spending and debt. They are increasingly wary of credit cards, and of debt. This has caused many to curb their spending in an attempt to reduce debt. And that means the retail sector — which is seen by many as unnecessary spending — gets hit.
At some point, though, the stock market should rebound more solidly, and the retail sector will come along. It may not happen until sometime after September and October, but at some point retail sales will pick up as the economy begins making better inroads to recovery.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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