Retail sales slowing down

How will the retail sector deal with lacklustre retail sales and the meltdown of the sub-prime mortgage market. This sector of the mortgage industry accounts for 20% of all mortgages and if their rates continue to increase, it will lead to a lot of problems for consumers at the lower and medium spectrum of spending. According to Stephen S Roach, the managing director and chief economist at Morgan Stanley, “The bursting of the housing bubble has all but eliminated that important prop to U.S. consumer demand.”

Market experts are split on how deep the impact will be going forward. Some, including Paul Kasriel, chief economist with Chicago-based banking firm Northern Trust Corp., point to February’s disappointing retail sales numbers. According to Commerce Department figures, retail sales, excluding autos, slipped 0.1 percent. Kasriel thinks the slow sales could be the beginning of a recession that will last well into 2008. Following on the heels of no growth in January, analysts were expecting a retail sales increase of at least 0.3 percent.