Signals Are Mixed as U.S. Retail Sales Rise (Inflation concern grows)

[kskiska]

Inflation Concern Grows As Economy Recovers

Higher prices for gasoline, lumber and food helped boost the value of U.S. retail sales last month, adding to concerns that the Federal Reserve may have to raise interest rates rapidly to control inflation, analysts said yesterday.

Retail sales rose 1.2 percent in May, reflecting consumers' willingness to spend more for a wide variety of goods, the Commerce Department reported.

While that bodes well for the strengthening U.S. economic recovery, it also adds to the reasons Federal Reserve officials are warning that they may have to raise interest rates more aggressively than many investors had expected.

"The retail sales data dovetail with some heightened concern about inflation," said Raymond W. Stone, an economist with Stone & McCarthy Research Associates. "The inflation outlook is worse now than six months ago. . . . have to worry about whether that gets ingrained in expectations" that prices will keep rising.

more…
http://www.washingtonpost.com/wp-dyn/articles/A41818-2004Jun14.html

[kalian]

1. The DO have to raise interest rates....

but that would send the economy, what's left of it, over the edge
and into the abyss. They're in a massive catch-22...of their own
making.

[loathesomeshrub]

2. Er no, not willingness to spend, what the hell choice do we have

Higher prices for gasoline, lumber and food helped boost the value of U.S. retail sales last month. Retail sales rose 1.2 percent in May, reflecting consumers' willingness to spend more for a wide variety of goods, the Commerce Department reported

Yeah, if we want to eat, drive or maintain our houses, (although I certainly wouldn't be doing so right now) we have to pay these outrageous prices.

[On the Road]

6. Does That Mean

That gross retail sales rose 1.2%, of which 0.7% was accounted for by higher prices, meaning that approximately 0.5% was real growth?

[teryang]

3. Price increases reflect inflation not value

How does this report compare to the recent report that retail sales in the eight largest American cities were falling?

[daleo]

4. The Perfect Storm for Bushco?

- Fiasco in Iraq, creating uncertainty in oil markets and anger about casualties.
- Consequent rise in oil prices and war related deficit fueling inflation.
- Inflation causing interest rates to rise.
- Rising interest rates cause:
- stock market collapse.
- housing market collapse.
- recession.

The most spectacular failure of a president in modern times. I should probably throw the torture scandal in there somewhere, but I don't want to look like I am piling on.

[mbperrin]

5. Let's hear it for a "kind" approach!

The end of life as we know it in this country DOES seem like enough!