The Markets

When is a door not a door?

The answer, of course, is: When it’s ajar.

Investors and analysts were trying to find the answer to a different riddle last week: When are strong retail sales not strong retail sales?

The answer is: When the retailers are department stores.

Consumers spent more in April than they have in more than a year. Commerce Department data showed April’s retail sales improved by 1.3 percent month-to-month and 3.0 percent year-to-year. Yet, several large department stores reported poor first quarter earnings and weren’t optimistic about the future, according to Barron’s.

The Wall Street Journal pointed out Internet and mobile app purchasing increased by 2.4 percent in April and was up 10.2 percent for the past 12 months, while purchases made in department stores fell by 1.7 percent for the last 12 months. The Journal said there is no easy explanation for lagging department store sales:

“Executives at traditional large retailers struggled to explain the slump, which for some companies was their worst since the recession. Some pointed to a decrease in mall traffic, while others said shoppers were spending more on items their stores don’t sell such as entertainment, travel, and food.”

The Journal also said strong consumer spending focused some economists’ attention on the Federal Reserve and the likelihood it will take actions intended to increase interest rates in mid-June. However, CNBC reported the probability of a rate increase in June remained low.

Which country has the world’s fastest growing economy? We all know China’s growth is slowing. Last week, China’s Vice-Premier Zhang Gaoli indicated the country is on pace to match its growth target of 6.5 percent to 7.0 percent for 2016. As we’ve mentioned before, the Conference Board believes Chinese government growth numbers are inflated. It estimates China’s true growth rate at 3.7 percent for 2016, which is unchanged from 2015. That’s still a lot faster than the 2.0 percent growth projected for the world’s advanced economies by the World Economic Forum (WEF).

Advanced countries may be lagging, but there are countries in the world with economies that are growing apace. According to the WEF, countries that will deliver the strongest economic growth during 2016 include:

• Myanmar (8.6 percent)
• Ivory Coast (8.5 percent)
• Bhutan (8.4 percent)
• India (7.5 percent)
• Laos (7.4 percent)
• Iraq (7.2 percent)
• Cambodia (7.0 percent)
• Tanzania (6.9 percent)
• Bangladesh (6.6 percent)
• Senegal (6.6 percent)

These projections reflect gross domestic product growth, which is the total of all goods and services produced in a nation, and offer little insight to issues such as well-being and quality of life.

Weekly Focus – Think About It

“I hope it is true that a man can die and yet not only live in others but give them life, and not only life, but that great consciousness of life.”
–Jack Kerouac, American novelist