It was an unhappy summer for U.S. retailers, but the outlook is slowly improving. Figures released on Tuesday were better than expected and gave experts heart that the U.S. economy -- 70 percent of which is made up by consumer spending -- may be on the mend. And sales figures will only look better as the year goes on because we'll be comparing them to numbers from last fall, when the economy nearly ground to a halt in the wake of the Lehman Brothers bankruptcy and stock market crash.
Most predictions had called for lukewarm sales in August, as parents held the line on back to school spending. A last-minute surge just before Labor Day gave retailers hope, and recent figures showing consumer debt dropping and the national savings rate rising are making investors optimistic that the economy may be about to turn a corner.
"I could almost say we have the Holy Trinity of good news," said Bryan Place, president of Place Financial Advisors, an investment management firm in Manly, N.Y. "The savings rate is rising, personal debt is falling and sales aren't falling off a cliff."
Consumer spending is necessary for the recovery, but in combination with lower debt and more savings, it will set up a healthier economy in the future, he said. And there are already signs that consumers are perking up.
September got off to a mildly encouraging start. The International Council of Shopping Centers said Tuesday that sales were up for the week ended Sept. 12, which included Labor Day sales and the end of the back to school season. Sales were flat over the week before, but up 1.6 percent over the year-ago period.
Michael Niemira, ICSC's chief economist, noted the week benefited from easier comparisons -- this year's period included Labor Day, which came later than usual -- along with milder weather and slightly better demand. But he maintained his forecast that the whole month of September will be down two percent below last year.
If October can improve on last year's poor showing, expect investors to take notice.
Introduction to Value Investing
Are you the next Warren Buffett?View Course »