Reports from the US on Thursday indicated that US consumer spending rose significantly in the past two months, hitting the highest point in the last five months. Additional reports yesterday confirmed that the number of Americans filing for unemployment benefits remained steady. Taken together, these reports allude to signs of only moderate economic growth, and investors have begun to question whether such growth is enough to stall another stimulus plan. All eyes are on Federal Reserve Chairman Ben Bernanke who will be addressing this issue today in his speech from Jackson Hole, Wyoming.
Despite the continually downtrodden US economy, same-store sales in the US in August wildly exceeded projections, an accomplishment that can be attributed to both the abundance of back-to-school promotions and unseasonably cool weather, which made the shopping experience more comfortable in many regions. Same-store sales rose 4.4 percent in July and 5.9 percent in August, surpassing the expected 4.2 percent increase. Another sign of a slowly recovering US economy is a renewed interest in 401(k) retirement plans, a way to save which fell to the wayside during the hay day of the financial crisis and is now showing positive signs of growth.
Nevertheless, the positive signs are tempered by fears that rising gas prices and an expected retail slow-down will indicate that the US economy isn’t entirely back on track. Stock prices fell broadly on Thursday in advance of Bernanke’s speech today, and the dollar rose against most of its popular currency pairs. Trading in Friday’s European session is likely to show thin volumes as investors wait anxiously for Bernanke’s announcement.