Upbeat economic indicators push DJIA over 13,000; NASDAQ over 3,000

Despite the sharp rise in gas prices over the past month, retail sales increased by 1.1 percent in February, the largest percentage increase in five months. Excluding automobile sales (which are counted by the Commerce Department as retail sales), February sales were up by 0.9 percent — exceeding expectations (a Bloomberg News survey of economists found the median prediction was for a 0.7 percent increase, excluding autos).

In more positive news, the National Federation of Independent Business (NFIB) small business optimism index rose to 94.3, its highest level since December 2007 and the sixth straight monthly increase.

Through 11 a.m. Tuesday, the DJIA was up 0.52 percent to 13,027 and the NASDAQ was up 0.74 percent to 3,005.

IHS Global Insight’s U.S. economist Chris Christopher attributed at least some of the good news to the recent string of good weather:

“Retailers had a good month in February as unseasonably warm weather, increased consumer confidence, better job prospects, and a strong stock market helped Americans open their wallets despite feeling the pinch at the pump.”

Christopher also noted that retail spending last month was spread across multiple industry sectors (11 out of the 13 sectors that make up the Commerce Dept. report showed positive gains) and that personal spending adjusted for inflation can be expected to increase by 2.0 percent for the first quarter of 2012.

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Heard in the news: $6 gas a possibility?

Before we get too carried away, let me give some context:

On Thursday morning, New Jersey Governor Chris Christie was on MSNBC’s Morning Joe to talk about the presidential election, when he brought up the issue of rising gas prices and how it would play as the primary season heats up. Christie’s argument was that if gas hits $6 a gallon, it would have a huge effect on the general election because gas prices affect consumers and businesses at all levels.

Granted, one can never be sure about the validity of a statement that’s political in nature. But, adding credibility to the fear of rising gas prices, a AAA spokesperson recently told the Los Angeles Times isolated parts of the country could be seeing $5-a-gallon gas “by April or May.”

Today, the Reuters/University of Michigan consumer sentiment index for February was just barely higher than the previous month – making it the slowest consumer confidence increase in months. IHS Global Insight economists contributed the minimal gains to rising gas prices:

“Americans are going to feel pain at the pump, since given the current state of affairs it is relatively safe to say that gasoline prices will surpass $4/gallon by Memorial Day. The recent news on the jobs front is cause for some hope that the future will look brighter, but as gasoline prices rise consumer confidence takes a beating,” said IHS economist Chris Christopher in an email.

While several gas stations here in Westchester already feature $4/gallon gas, for the national average to top that bar before Memorial Day weekend would be a significant blow to the economy. Currently, the national average for a gallon of unleaded gas is $3.647 – good for a 13 percent increase compared to exactly a year ago. In New York, the statewide average is even higher, at $3.910/gallon. That’s nearly 6 percent higher than just a month ago and 13.5 percent higher than a year ago.

Quake gets the hype, but Irene will have last laugh

Since the 1850s, there have been 12 hurricane strikes in New York state (according to a WSJ graphic in today’s paper).

That makes Irene soon-to-be-lucky number 13.

The word is that New Yorkas are more concerned about potential earthquake aftershocks than about the impending arrival of a storm packing a projected 115-mph punch. Lets not be silly, folks.

The local economy is fragile: as we saw earlier this week, employment prospects are improving in Westchester, but the retail market is still waiting for a sign from consumers, and as they say, consumer spending drives revenue and business growth.

Hurricanes, on the other hand, drive up gas prices and insurance costs. Is Irene going to cripple the local economy? Nah, but it’s not going to do it any favors either.

Don’t be surprised if gas prices stay elevated for longer than usual (despite the breakthrough in Libya) and if retailers feel the strain as a result.