The Economy This Week
A weaker economic outlook had shoppers cutting back on holiday spending last month, while consumer prices continued to inch up. Here's a look at this week's economic developments and how they may affect your business.
Consumer Prices Rising
Higher energy costs pushed consumer prices up by 0.3 percent in December and 4.1 percent for the year, the sharpest annual increase since 1990, the Labor Department reported Wednesday.
Excluding food and energy, core consumer prices rose by 0.2 percent last month and 2.4 percent for the year, the report said.
According to the National Federation of Independent Business, rising energy and labor costs are putting pressure on small-business owners to raise prices.
Retail Sales Down
Retail sales fell by 0.4 percent in December as holiday shoppers cut back on spending amid growing economic uncertainties, the National Retail Federation reported Tuesday.
Holiday sales, which include November and December sales combined, rose just three percent to $469.9 billion last year, the slowest pace in five years, the trade group said. Clothing, furniture and home furnishing stores reported the weakest growth.
"Economic pressures caused deterioration in the sales climate at the end of the year," Rosalind Wells, the group's chief economist, said in a statement. Wells said retailers will have to adapt new pricing strategies and promotions to encourage spending.
Housing Starts Plunge
The number of new residential construction projects fell by 14.2 percent last month to 1.006 million, the lowest level since 1991, the Commerce Department reported Thursday.
Last year, construction began on a total of 1.3537 million housing units, compared to 1.8009 million in 2006.
Housing permits and housing completion were also down in December.
"Builders pulled fewer new permits and continued to work down their inventories of unused permits toward the end of the year," David Seiders, the chief economist at the National Association of Builders, said in a statement. Seiders said market conditions should improve in the months ahead, sparking an increase in building activity.