Wednesday, December 16, 2009

Economic Indicators Improving

Both retail sales and consumer sentiment in the U.S. have increased in recent weeks, exceeding projections and prompting new hopes of a stabilizing economy. According to the U.S. Commerce Department, retail sales rose 1.3% in November, while new survey data shows December's consumer sentiment index has risen six points to 73.4. "Confidence improved in early December mainly due to widespread price discounting by merchants attempting to spark holiday sales as well as somewhat more positive expectations for economic growth and employment," said Richard Curtin, director of the University of Michigan surveys of consumers.

According to government reports, sales in November were lifted by strong receipts from gas stations, as well as increased purchases of cars, food, electronics and sporting goods. Additionally, sales of building materials jumped 1.5% last month, while mail and Internet orders rose 1.2%. Meanwhile, the unemployment rate in November fell to 10% from a 26-year high of 10.2%, as companies cut 11,000 workers, the fewest monthly number since the recession began in December 2007. Adding to these positive trends, it is expected that this week's meeting of the Federal Reserve will not result in significant monetary policy changes, with interest rates already at historic lows near zero.

Despite the improving indicators, though, a separate report found small business owners continue to struggle. A new survey from American Solutions, a conservative-action group, shows two out of three small businesses plan to lay off a worker in the next six months. The survey also indicated widespread dislike for President Obama's latest small business recovery plan, which proposes a temporary suspension of the capital gains tax. By a three-to-one margin, respondents instead would prefer a cut in payroll taxes.

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