Newspaper article THE JOURNAL RECORD

Economists Predict Slight Increase in July Retail Sales

Newspaper article THE JOURNAL RECORD

Economists Predict Slight Increase in July Retail Sales

Article excerpt

WASHINGTON -- Consumers are returning to shopping malls and auto lots, encouraged by the performance of the low-inflation U.S. economy.

Retail sales figures, set for release Wednesday by the U.S. Commerce Department, will probably register a 0.7 percent gain for July, up from a 0.5 percent increase in June, according to a Bloomberg News survey of economists.

"We've got very good consumer attitudes right now, a lot of which is spilled over from the stock market's gains," said Alan Day, vice president at Stratevest Group in Burlington, Vt., with $1.7 billion invested in stocks and bonds. While the Federal Reserve will take note of any pickup in spending in its deliberations on interest rate policy, Labor Department price reports set for this week will likely show that inflation remains in hibernation. And the Fed's own reports on industrial production and plant-use will show central bankers needn't fret that bottlenecks are developing that could generate inflation pressures. Industrial production likely posted a subdued gain of 0.2 percent in July, down from a 0.3 percent gain in June, and July's plant-use rate probably retreated to 83.4 percent from 83.7 percent in June. Taken together that should keep Fed policymakers from raising the overnight bank lending rate anytime soon. They next meet Aug. 19. An increase in retail sales last month should come as no surprise, said Diane Swonk, deputy chief economist at First Chicago, NBD. "June was a weak month, so we're set up to pick up a little bit. Consumers are not dead. This isn't a recession," Swonk said. Industry figures already show department store sales marched higher in July, led by gains at Federated Department Stores and Kmart. In the auto industry, General Motors and Ford Motor reported stronger-than-expected July sales, and Ford Chairman Alex Trotman said he expects robust, steady sales for the rest of this year. …

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