In yet another sign of the growing pressure on consumers, retail sales rose 0.3% in August, less than the 0.5% economists have expected. Excluding autos, sales fell 0.4%. This data will likely pressure stocks and underscore the call from Wall Street for the Federal Reserve to cut interest rates at the September 18 meeting of the Federal Open Market Committee. (Update: Consumer confidence remained low in September, further bolstering the case for a rate cut).
There are plenty of economic signs for investors to ponder. The Wall Street Journal is reporting that the amount of borrowing by banks under the Fed's primary credit program surged to $7 billion, the highest level since just after 9-11. Prices for imported goods unexpectedly fell in August because of declines in oil and natural gas prices, providing a temporary check on inflation, according to Bloomberg News.
What does this mean for the consumer? Will it force Fed Chairman Ben Bernanke to cut rates at a level that investors feel is warranted? Tough to say, but companies such as Harley Davidson Inc. (NYSE: HOG) have said that they were worried about consumer spending. Wal-Mart Inc.'s (NYSE: WMT) newest advertising campaign is focusing on low prices. Hovnanian Enterprises Inc. (NYSE: HOV) Chief Executive Ara Hovnanian told Bloomberg that the housing market was near a bottom and that it won't recover until 2009. The company is putting luxury homes on "sale" this weekend in order to unload its excess inventory
Update: Not surprisingly, consumer confidence in September remained at its lowest level in a year amid worries about the subprime mortgage meltdown and the credit crunch. Many people, though, continue to argue that the concerns about the economy are overblown.
Treasury Secretary Hank Paulson told CNBC that the "real economy is very strong" and that "I feel very confident that this economy is going to grow."
Well, there's one confident consumer.
[photo noelweathers]
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