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Retail Figures Unchanged in July
Aired August 14, 2001 - 08:27 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: And we're talking about, boy, all eyes on the economy. Today retail figures are coming out this morning, and, in fact, we want to go to Julia Boorstin. She is a writer for "Fortune" magazine.
Julia, we don't have those numbers yet. I'm expecting them very shortly, probably get them in my ear in just a quick second, but I'm wondering what you're expecting today?
JULIA BOORSTIN, "FORTUNE" MAGAZINE: Well, the economists have pretty much been expecting for retail numbers to have dropped .2 percent compared with the .2 percent rise in June which should sort of even out those gains.
LIN: Remind our viewers why it is that we care so much about these retail figures and how much people are spending at the stores?
BOORSTIN: So far, the American consumer really has been the backbone of the economy throughout this downturn and these retail numbers indicate whether or not Americans are still spending and how well the economy is holding up.
LIN: But here's what I don't get, I mean I keep hearing that it's not so much what we're spending you know out at the Wal-Mart or the Home Depot, but it's really what big companies are spending to buy lots of equipment like cell phones and networking systems. That is really what drives this economy and drives the engine forward.
BOORSTIN: That's definitely true. But what happened is that the economic slowdown hit most significantly those big businesses and that's why the Fed has done the six interest rate cuts so far this year and probably will do another one next week. Now those interest rate cuts take about six months to take effect. So in the meantime, the government is counting on American consumers to go out and keep on buying things such as big ticket items like cars or even just go to do some back-to-school shopping. And that's why they've put out the rebate checks so Americans will continue spending and hold off the recession until...
LIN: Yes.
BOORSTIN: ... the interest rate cuts come and help out the big businesses.
LIN: Julia, have you gotten your check yet?
BOORSTIN: I have not. Americans will continue getting their checks through the end of September, so I'll probably get mine sometime this month.
LIN: All right. Well, I know what we're going to do, we're just going to put ours in the bank and we're really not planning on spending it because, you know, we may need it for a raining day these days.
BOORSTIN: Well that's an attitude that a lot of Americans are taking. But some companies, like we've seen today like Wal-Mart and Home Depot, are getting the benefit of those rebate checks. And the economy -- the government is expecting the economy to see about half of the money from the rebate checks be infused back in. And if that does happen, then the economy will get a little boost.
LIN: All right. We're ticking down to those numbers. They're going to come in literally any second. What are you looking for when these numbers come in?
BOORSTIN: Well, I think that we'll probably see what the economists are expecting that retail numbers will drop about .2 percent. And if that does happen, then it shows that the economy really is in a slowdown. But if you little -- look a little bit closer at those numbers, economists are expecting that, excluding auto sales, retain numbers gained .1 percent.
LIN: Julia, this just in: retail figures unchanged in July. What do you read in that then?
BOORSTIN: Unchanged.
LIN: Unchanged.
BOORSTIN: What does that exactly say? Does that mean that they gained nothing?
LIN: Brian, what do you think? Yes, that's what he's saying. Nothing -- no change.
BOORSTIN: That's actually better than what economists were expecting. Economists were expecting a .2 percent loss so that speaks positively for the economy. It's certainly not a gain, but because you're expecting sales in July to slow, that should speak well for the economy and we may see an uptick in the market today because of that.
LIN: So what does that mean when Alan Greenspan and the Fed meet yet again to talk about interest rates?
BOORSTIN: Well, overall strength in the consumer sector indicates that we will be staving off a recession and having the retail numbers stay so steady means that we don't have to worry about inflation. And I think that because of that, Greenspan will most likely do an interest rate cut of another quarter point next week. LIN: All right, thanks so much, Julia Boorstin. Thanks for hanging in there while we waited for these numbers. Julia Boorstin, "Fortune" magazine.
BOORSTIN: Thank you.
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