U.S. consumer sentiment grim but retail sales jump

WASHINGTON/NEW YORK Fri Aug 12, 2011 7:50pm EDT

Shoppers inspect cleaning supplies while shopping inside of a Bed Bath & Beyond store in New York, April 13, 2011. REUTERS/Lucas Jackson

Shoppers inspect cleaning supplies while shopping inside of a Bed Bath & Beyond store in New York, April 13, 2011.

Credit: Reuters/Lucas Jackson

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WASHINGTON/NEW YORK (Reuters) - U.S. consumer sentiment worsened sharply in early August, falling to the lowest level in more than three decades, after retail sales posted the biggest gain in four months in July.

High unemployment, stagnant wages, gridlock in Congress, and a stock market slump all contributed to a consumer mood that was as grim as when Jimmy Carter was President during the recession of 1980 and interest rates were more than 20 percent.

Despite the gloom U.S. consumers kept spending in recent weeks with retail sales up in July by the most in four months.

"People's spending doesn't always correspond with their mood," said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut. "I doubt things are as weak as the sentiment readings suggest, but no doubt people will be cautious in August."

After one of the most volatile weeks in memory, U.S. stocks ended higher on Friday as the encouraging retail sales data overshadowed the weak consumer sentiment data.

But "the tumultuous last 10 days or so hasn't given our core customer, the middle income family, any reason to be more confident," said J.C. Penney Co Inc Chief Executive Myron Ullman on an analysts conference call Friday morning after the chain store retailer forecast weaker-than-expected third-quarter earnings.

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Comments (24)
breezinthru wrote:
395,000 Americans lost their jobs last month and you know it is going to be nearly impossible for most of them to find comparable work. In fact, it will be nearly impossible for most of those newly unemployed Americans to find any work at all.

But the market went up because ‘experts’ were expecting 400,000 people to lose their jobs.

The American economy has been shedding around 400,000 jobs per month for a very long time and this month is no exception.

If that sorry statistic is the only thing the market has to rally on, our country is in deep trouble… partly because our economy is still shedding a lot of jobs and partly because American investment professionals can’t distinguish between good news and bad news.

Aug 11, 2011 10:10pm EDT  --  Report as abuse
jscott418 wrote:
I can’t believe we celebrate .3% retail sales. Because that is the figure when you take away Fuel increases. It sure takes so little anymore for optimism to kick in. How desperate does that sound?

Aug 12, 2011 9:04am EDT  --  Report as abuse
DwDunphy wrote:
Thank earlybird back-to-school sales for that mini-spark of retail activity.

Aug 12, 2011 9:50am EDT  --  Report as abuse
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