Why The Disarray In Retail Shouldn’t Be A Big Worry For U.S. Economy
A furious pace of store closings and bankruptcies has drummed up fears that U.S. retail is collapsing. Not so fast: Many indicators suggest that retail employment is unlikely to shrivel and the economy will withstand any shock from the sector’s rout. Granted, the industry’s current woes can’t be ignored. Retail sales account for almost half of consumer spending, which in turn makes up about 70 percent of the economy. Retailers employ 15.9 million people, or about one in every 10 U.S. workers, and positions at certain types of stores may become harder to find. For starters, the broad trend in retail purchases is moving higher: Excluding auto dealers and gas stations, sales were up an annualized 4.6 percent over the past three months. Even with recent job losses, retail headcount is close to its 12-month average. Such figures suggest the industry is hardly about to shrink or fade away. Even with the “eye-catching headlines about store closings” and other recent struggles in retail, “we don’t see much of an effect on retail employment and therefore on consumer spending,” said Robert Sockin, an economist at UBS Securities LLC, which issued research last week titled “Reports of Retail’s Death Have Been Greatly Exaggerated”. “As long as there’s demand for workers and the consumer stays healthy, that will keep the retail sector buoyant.” Read more at Bloomberg.
