Wednesday, June 13, 2012

Economy: Ammunition From The Gas Station

Today the U.S.stock market closed in red again. Bloomberg wrote "U.S.Stocks Drop as Retail Sales Fall" . But I reckon that this headline represents a misunderstanding. The U.S.retail sales were indeed down 0.2% from April to May (marketwatch). But this was mainly the result of the sinking gas prices which reduced the expenditures at the gas pumps. Sales at gas stations slumped 2.2% in May, the biggest retreat since December. If gas purchases are omitted, retail spending actually rose a slight 0.1% last month.

The falling costs for gas gives consumers some ammunition to buy other goods which they partly used in May. Sales rose 0.9% at apparel stores and increased 0.8% at electronics and appliance stores. The biggest beneficiaries were Internet and mail-order companies; they posted a sharp 1.3% increase in sales.

The recent fall in the oil prices therefore should fuel the engine of the economy, consumer spending, in the coming months and this could induce gains on the stock market.

No comments:

Post a Comment