This Week's Economic Roundup
Despite turmoil on Wall Street, shoppers have kept spending this summer, amid a more positive outlook on the economy for the months ahead. Here's a look at this week's economic developments and how they may affect your business.
Leading Indicators Rebound
Following declines in June, the index of leading economic indicators rose 0.4 percent last month, led by gains in consumer expectations and vendor performance, the Conference Board reported Monday.
Six of 10 index components improved in July, including a drop in new jobless claims and more orders for consumer goods and materials, according to the New York-based private research group. On the downturn were building permits, new orders for non-defense capital goods, and interest rate spread, while average manufacturing hours held steady.
The index has shown gains in three of the last six months, rising by 0.1 percent in the six months ending July.
Over the same period, the coincident index, a gauge of current economic conditions, rose by 1.1 percent, led by strengths in industrial production and employment.
Retail Sales Up
Same-store sales rose by 0.2 percent last week, the first gains in over three weeks, the International Council of Shopping Centers and UBS Securities reported Tuesday.
The gains, which are based on sales data at 60 retail chains nationwide, were driven by lower temperatures and sales-tax exemptions, according to Michael Niemira, the New York-based trade group's chief economist.
According to the National Retail Federation, the growing turmoil within the subprime mortgage and private equity markets has not kept shoppers from spending this summer.
In a survey of 1,000 consumers released this week, roughly half said the troubles on Walls Street hadn't changed their spending habits, while about 25 percent said they didn't even follow the stock market. Only 13 percent said the crisis had them thinking twice about major and nonessential purchases, the survey found.
Business Bankruptcies Jump
Following sharp declines last year, the number of businesses filing for bankruptcy rose to 6,705 in the second quarter, a 7 percent increase from the start of the year, Euler Hermes ACI reported Tuesday.
Business bankruptcies over the first two quarters combined are now up by 45 percent over last year when changes to federal bankruptcy laws prompted a 50 percent decline in corporate insolvencies, according to the Owing Mills, Md.-based credit insurance firm.
Rising energy costs, tighter monetary policy, and declines in the housing market were cited as causes of the gains. The firm is forecasting 30,000 business bankruptcies by the end of the year.
Gas Prices Back on the Rise
Average gas prices rose by 1.4 cents last week to $2.785 per gallon, the first increase in four weeks, the Energy Information Agency reported Wednesday.
As of Aug. 20, average gas prices were 13.9 cents lower than the same period last year. The modest gains were driven by soaring price hikes in the Midwest, where average prices pumps jumped by 10.2 cents to $2.87.1, the highest prices in the country. By contrast, prices in most regions dropped, including a 6.6 cent decline in California to $2.862 per gallon.