Winter retail blues?
Here’s a thought to send a shiver through that Labor Day picnic: The top question for the economy is how enthusiastically Americans will start girding themselves for a blustery winter. Torrid sales of air conditioners are history, so retailers must face the harsh reality of trying to unload galoshes and parkas. Will consumers turn their backs on cold-weather gear, holding on to their dowdy threads, as they did with summer apparel? There is no direct or complete answer this week, but clues about the direction of spending will be provided in the government’s report Friday on consumer credit for July. In June, revolving debt rose by $9.6 billion, less than the $13.1 billion gain in May. Economist A. Gary Shilling, who is predicting a recession next year, says current levels of individual debt are equal to the record heights of 1989. Shilling, who heads an economic-consulting firm in Springfield, N.J., says consumer spending “will fade out under the burden of heavy debt and weak job and income growth.”
On the hour
Just to further dampen spirits, Thursday’s report on labor productivity and costs likely will provide another silver-plated opportunity for hand-wringers, who point to declining wages as the single reason for blossoming corporate profits. As a harbinger, Friday’s report on employment showed that workers’ average hourly earnings fell by 2 cents an hour in August, to $11.47. On a more positive note, wages have advanced by 3 percent over the last year. The workweek for private workers was down to 34.4 hours, from 34.6 hours.
Late holiday auction
Small investors who take part in the government’s weekly auction of Treasury bills will find the sale taking place Tuesday instead of Monday, because of the holiday. Yields have been declining lately, with three-month bills selling last week at an average discount rate of 5.34 percent, down from 5.43 percent at the previous auction. Six-month bills sold for the same discount rate, 5.34 percent, also down from 5.43 percent.
City gets its sea legs
Seafarers from around the globe, as well as manufacturers who serve their industry, will gather in Chicago beginning Thursday for the International Marine Trade Exhibit and Conference, an event that is expected to attract 45,000. The convention, which runs through Sunday, is for marine dealers, distributors and buyers. The Chicago Convention and Tourism Bureau says the expo will contribute more than $53 million to the city’s economy.
Send in the Fed
The stock market has continued to meander, without a serious price correction, because of “economic statistics that don’t clarify the situation one whit. The numbers are inconclusive,” says Chicago investment adviser Marshall Front. The recent spate of reports points to a need for the Federal Reserve to reduce interest rates two or three more times over the next six months, he says. That would presumably be good for stocks and bonds. Economic growth, while weak, “is going forward at a modest rate without a whiff of inflation” says Front, managing director of Trees Front Associates Inc. If the Fed does, indeed, ease rates several more times, he says, it will provide a brighter economic outlook just in time for the 1996 elections. The central bank cut interest rates in July for the first time in almost three years.
Final note
Stock, bond and commodity markets, banks, most businesses and government offices are closed Monday for the observance of Labor Day. The nation gets back to regular business Tuesday.
