Retail sales up

[omnipleasant]

DOOMED!

The VAT cut is obviously doing more than the lazy critics suggest. Not just "1p off a Mars Bar!!!11", but extra leeway all through the chain, from retailers to producers. Top marks to the government. Though more spending in the budget would be good too.

Very odd recession this one, though. Definitely not just a normal "bust" phase of the cycle.

Sales of retail goods rose in January, the British Retail Consortium (BRC) has said, after shops cut prices to encourage consumers to keep spending.

On a like-for-like basis, retail sales rose 1.1% compared with a year earlier, the biggest increase since May 2008.

news.bbc.co.uk/1/hi/business/7880428.stm

The rate of VAT has been cut temporarily to 15%, with a return to 17.5% in place for the end of 2009. The government has predicted that this will increase consumer spending by about 0.5%. Much of the analysis of this tax cut has been critical of the policy and concluded that the government's estimates of the impact on spending are over-optimistic. The source of this criticism is a misunderstanding of the mechanism through which the tax cut will have an impact. In fact, we believe the government's estimates are overly-pessimistic.

www.ifs.org.uk/publications/4418

[yord]

retail sales are up for quite a few however their profits are down . The only reason retail sales are up is that theyre off loading stock

[ricklinc]

Are you still posting your optimistic drivel about Gordon Brown's economic prowess? He's an incompetent idiot. Get over it and move on.

[sushimo]

Of course it's up!! Obvious innit! All those 'savers' have decided to say 'sod it' and are out buying anything that isn't tied down. May as well splurge it and then throw themselves at the feet of benevolent Nu Labour for benefits as not.

[flatandy]

But it is a weird recession.

House prices are starting to rise again (or at least bottom out); retail sales aren't falling. I don't know many people who are out of a job. Those that I know who have been made redundant are almost exclusively high-earners in fairly high power jobs, and are not too distressed as they can afford 3 months out of work finding something else that's more suited to what they want to do.

It's odd, but at the moment it appears to be mostly rich people losing jobs.

[flatandy]

Sensible economics from Gordon, then, Sushi? He wants the public to spend us out of a recession. Bring interest rates low enough and there you go, nobody is saving and the money is circulating in the economy.

[VikingHumpingWitch]

Feb 10, 2009 12:31:24 GMT flatandy said:

Sensible economics from Gordon, then, Sushi? He wants the public to spend us out of a recession. Bring interest rates low enough and there you go, nobody is saving and the money is circulating in the economy.

I'm almost tempted to think this is right. The concern was that in not spending we are taking ourselves into a recession, in which case getting people to spend is the obvious response.

But that suggests competency and I'm not sure I'm ready to believe that yet.

[flatandy]

And, as I've mentioned before - we aren't out of the woods here, but enquiries are up dramatically here, and there's even a little work, now. The company may be emerging from the mire.

[feral]

mmmmm I think you should stop seeing things so optimistically till you see what happens when retailers restock.I mean it couldnt possibly be that some people are buying now cos they know everything is going to shoot up in price soon .

[sushimo]

Ahhh, but it is going to jump up and take a huge bite out of his butt. Most of these people have made these savingsa for their own security - so they don't have to rely on the state. But now? Oh yes, they will be claiming billions in benefits before too long. Another false economy move.

Now, maybe Broon is a tad cannier than I give him credit - he knows he's gonna be booted, and that this will land firmly in the lap of the next government. But it could be in the next year or two, and then watch the weasel squirm.

[flatandy]

Feb 10, 2009 12:37:51 GMT feral said:

mmmmm I think you should stop seeing things so optimistically till you see what happens when retailers restock.I mean it couldnt possibly be that some people are buying now cos they know everything is going to shoot up in price soon .

Really?

Shoot up in price?

We are in a deflationary world, with commodities prices plummetting as demand falls off. Nothing's going to shoot up in price in the next few months.

I'm not hugely optimistic. We're clearly in a recession.

It's just quite an odd recession where the impact, for once, appears to be at the top of the economy, on high earners.

[omnipleasant]

"Most of these people have made these savingsa for their own security - so they don't have to rely on the state. But now? Oh yes, they will be claiming billions in benefits before too long. Another false economy move."

Erm. If people are so well off that they are living on savings, they are hardly going to be in need of benefits any time soon. If they are pensioners they will be getting benefits anyway.

And I'd love to see what the "penalising savers!!" mob actually suggest as an alternative. Raising interest rates going into a recession?

But no - apparently it's not because low interest rates are essential, it's because "Broon wants to mess up the economy!!!!"

Honestly. Democracy. Such a bad idea.

[omnipleasant]

"Nothing's going to shoot up in price in the next few months."

Mind you, give it a year or so - hyperinflation isn't impossible, depending on how bad things really get first. Then we'd be in for some fun.

[VikingHumpingWitch]

Feb 10, 2009 12:45:41 GMT @omnipleasant said:

If people are so well off that they are living on savings, they are hardly going to be in need of benefits any time soon.

Much as I am annoyed that my meagre savings will be netting me less unearned income in interest, I have to say this is bang on. I'd probably last about 7 months on my savings, and another percent or two on the interest rate wouldn't make any difference to that timescale. If you are losing that much in interest it suggests you've got more than 7 months worth of survival cash stored up, and that's a good length of time to find work even in a recession.

[flatandy]

True. Although I think it's unlikely it is possible.

Still, people aren't buying today because they're scared of hyperinflation in 12 months.

[Woolf]

Perhaps if the difference between what banks pay in interest and what they charge for loans was not so great people might think different.

Went in the bank yesterday and the tellers had stockings on their heads.

[ricklinc]

Don't think inflation is going to be a problem. This isn't the labour government from the seventies that gave in to any union that demanded a pay rise. This one just gives in to civil servant pension demands. Thatcher did the unions and I don't think Brown has got enough time left for them to get confidently militant again.

[Woolf]

As for why people are buying at the moment.
More down to the 30%-60% sales, less down to the 2.5% VAT cut.

Looking at buying a new 24" Monitor.
£149 down from £249, so that £2.50 in VAT and £97.50 by the retailer.
Even a GCSE student can do the maths.

[omnipleasant]

"Looking at buying a new 24" Monitor.
£149 down from £249, so that £2.50 in VAT and £97.50 by the retailer."

GAH!

Have a read of the IFS link I posted.

[yord]

inflation is going to be a massive problem for the UK , its starting with food prices now and will be become a torrent of rises over every last thing in months now