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Retail Sales on the Rebound in the U.S.

In Marketing on April 2, 2013 at 1:45 pm

Retail store sales increased more than double the expected amount in February 2013, a sure sign the economy is well into recovery as consumer confidence rises.

Economists were surprised by the sudden increase and few said they saw the change coming. Companies like Costco and Ford benefitted from this rise as well, which may lead to more job openings as the organizations become more confident in their yearly profits and business outlook.

Raymond Stone, a managing director at a business research company based in Princeton, New Jersey, says the rise in retail sales is “comforting” because it shows the country is on the right track towards economic recovery. The fact that the increase exceeded even many optimistic projections is a very positive sign, he says.

This retail boom also helped the stock markets, as the Dow Jones Industrial Average had its longest rally since 1996. Building material companies like Lowes and Home Depot, car dealerships, general merchandise stores, and even many Internet-based retailers saw the biggest increases during this time period. The sales of cars and trucks saw a large increase over the same period last year, increasing from 14.4 million units sold to 15.3 million.

Warehouse and discount-chain giant Costco reported a 39 percent increase in its second quarter profits by continuing to further increase discounts. The stores also benefitted from their discount prices on necessities like gasoline and other household items that are marketed under the store brand, Kirkland.

The increased spending may be due to the fact the job market is slowly picking up and unemployment rates are dropping and staying below eight percent. Retail stores added 24,000 new employees in February, which also exceeded many economists’ predictions for the time period.

These signs of an improved economy have many speculating that the U.S. may be on its way to a long-term recovery that could stabilize things for years to come. However, some businesses still struggled during this retail boom, including companies like Wal-Mart and Target. But economists are hopeful that the optimism in the employment sector and retail industries will spill over into other economic factors like the housing market and overall consumer confidence—both essential for a healthy national economy.

Overall, the gains reflect a positive trend in the faces of steady bad news on the economic front since the recession first started in the late months of 2008.

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