Wednesday, January 19, 2011

Split Gains in Retail

We've learned that the recent holiday shopping season was a promising one for the economy, but more recent data shows a bit of an Achilles' heel: Most of the growth in retail sales was fueled by upper-end purchases. The Bloomberg Retail Sales Luxury Index was up 8.1 percent for Christmas 2010 over the previous year, but the Bloomberg Retail Sales Discount Index was up just 0.9 percent.

You can see the same dichotomy at work at individual retailers. Tiffany and Coach both have reported strong sales lately, while the Family Dollar's sales forecast fell short of analysts' expectations when they were released earlier this month. Sales via American Express cards have rebounded more strongly than sales via MasterCard or Visa.

Strong retail sales are a positive for the economy, no matter where they're coming from. But it would be a better sign for this economic recovery if the retail gains had been a little more broad-based.

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