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American Morning
Retail Down Less Than Expected
Aired January 15, 2002 - 09:32 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN FINANCIAL ANCHOR: Retail sales numbers for the month of December, one of those key pieces of data that Wall Street looks very carefully at. Here to tell us about how they came in, and the likely effect on the markets, is Kathleen Hayes -- good morning.
KATHLEEN HAYES, CNN FINANCIAL NEWS: Good morning, Jack. Great to see you.
CAFFERTY: Good news, and just in time, right?
HAYES: Well, you know, it wasn't as bad as people expected, because they were looking for a pretty significant drop in retail sales, which I want to remind everyone, is a very broad measure of sales. It is everything from gas stations to clothing, to furniture, to building materials. We are not just talking about chain stores or something like that.
Now, a small decline, down 0.1 percent -- take out autos, also down 0.1. But people thought that auto sales had been much weaker compared to a very strong November, so that was a little better than they thought, and, in fact, one of the things that pulled this number down, Jack, was gasoline station sales. They were down 4 percent, but remember that's because of falling prices.
Obviously, we are still filling the tank, and there were some things that were pretty good. Furniture sales looks like -- things like electronics, things having to do with the home, and in fact we had another little report this morning, a weekly look at the chain stores. You remember Bank of Tokyo-Mitsubishi-Schroeder?
CAFFERTY: Sure.
HAYES: Okay. Well, they have increase 0.6 percent in the January 12 week, and again they said women's clothing was strong. I think a lot of people must have gone slopping for the sales. We can check with Paula later, but I think that all the discounting must have drawn a lot of women into the stores to buy clothing, and again, a lot of things related to the home were strong.
CAFFERTY: Based on the bills at my house, it was a very good retail season for the nation retailers.
HAYES: But you saved a lot money because everything was on sale, don't forget that.
CAFFERTY: They discounted everything early this year, too right? Everything was marked down.
HAYES: Yes, yes, yes. So again, this is -- they are counting on the consumer, the consumer is two thirds of the U.S. economy. Mr. Greenspan, head of the Federal Reserve, spoke on Friday. He was very cautious about the outlook, and so -- and he focused on the consumer, saying rising unemployment could make us nervous about spending, so --
CAFFERTY: What are they going to do in a week and a half, two weeks?
HAYES: They're going to cut rates again. But you know --
(CROSSTALK)
HAYES: Yeah -- I think something that is really funny, Jack -- you -- if you think back, last year Federal Reserve thought that the second half of this -- the year we just completed, the economy would be growing three percent. Instead, we fell into recession.
Okay, they are not, they don't have a crystal ball that tells them exactly what's going on. They look and they do the best job they can, but why is everyone so nervous about the fact that the head of the Federal Reserve is kind of hesitant about the outlook? He hasn't been that right in the past, and I mean this with no disrespect --
CAFFERTY: Well, they also --
HAYES: -- like a lot of other forecasters, but people -- investors, maybe, in Wall Street should be looking a little bit more. Earnings are coming in, that will be very important, and maybe that will be a better guide what's going to happen than what the head of Fed is -- the good news is, he's going to take to make sure the recovery does happen.
The other thing too, that is worth mentioning, is that prediction was made without any knowledge of what happened on September 11, which had a huge effect on economy.
HAYES: Absolutely, although things were still slipping and sliding --
CAFFERTY: Yeah, they were slowing down.
HAYES: -- we probably wouldn't have three percent. And the good news, of course, that's another thing. We've rebounded from September 11 in the economy, and one of the doubts economists have about where we are now is what we are seeing in these numbers, looking a little better, is it just a rebound from September 11, and we're back on this kind of sluggish ground, or is it the beginning of a genuine recovery? And so that's why we are watching all these reports so closely.
CAFFERTY: Yeah, glad to have you with us. Thank you.
HAYES: Lovely to be here.
CAFFERTY: Kathleen Hayes, the latest on retail sales and other things that may be driving the markets, she thinks the fed will cut again in a couple weeks.
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