Consumers not feeling a recovery

Surprise drop in July retail sales and an unexpected decline in Wal-Mart's same-store sales show Americans still aren't in the mood to spend.

NEW YORK (CNNMoney.com) -- Two key reports Thursday showed one thing: happy days are not here again for American consumers.

Retail sales fell in July after two straight months of gains, the government reported Thursday, a drop that surprised economists. Without car sales from the "Cash for Clunkers," the numbers would have been even worse.

And Wal-Mart (WMT, Fortune 500), the world's largest retailer, reported an unexpected decline in its key measure of U.S. sales.

"From a consumer finance position, people are still struggling," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com. "Wages have fallen from the previous year and consumers don't [still] have alternative sources of cash."

0:00 /1:56Xmas spending ... now?

Consumer spending fuels two-thirds of all economic activity in the United States. So even though an economic recovery could use people splurging on coats, bags and shoes again, Hoyt said it's unlikely that consumers are going to lead the nation out of this recession.

"There will have to be other areas providing the lift to the economy such as business investment and inventory levels," Hoyt said

Reality check: The Commerce Department said total retail sales declined 0.1% in July, compared with June's revised gain of 0.8%. Total sales were originally reported to have increased 0.6%.

Economists surveyed by Briefing.com expected June sales to increase 0.7%.

Sales excluding autos and auto parts also registered an unexpected decline of 0.6%, compared to a revised 0.5% increase in the measure in June. Sales, excluding autos, were originally reported to have increased 0.3% in the prior month.

Economists had forecast a gain of 0.1% in July sales, excluding auto purchases.

"This is awful. A reality check for the green shooters," Ian Shepherson, chief U.S. economist for High Frequency Economics, wrote in a note Thursday

"The big story is the core [retail sales]. Excluding autos, gas and food, sales fell 0.4%. That's the fifth straight decline," Shepherdson said. "People are cash-constrained and credit-starved. Remember, their spending accounts for 89% of private sector GDP."

While the Cash for Clunkers program did create some "healthy" demand for new automobiles "there were widespread declines everywhere else," Hoyt said.

Excluding a 2.4% gain in automobile sales and a 0.6% gain in clothing purchases in the month, most other retail categories suffered sales declines.

The government report showed building materials sales fell 2.1%, electronics purchases fell 1.4%, department store sales slumped 1.6% and sales at general merchandise stores declined 0.8%.

Furniture sales fell 0.9% and sales at food and beverage sellers declined 0.3% in the month.

Commerce Secretary Gary Locke said in a statement Thursday that, despite the slight decline in retail sales, the Obama administration remains "encouraged that the Recovery Act and other economic initiatives have stabilized conditions and helped those harmed by the economic crisis."

"The road to recovery is long, but with every recovery dollar we spend and project we start, we are one step closer to getting there," he said.

Weakness at Wal-Mart: The much worse-than-expected government report followed a worrisome quarterly report from Wal-Mart in which the discount giant logged an unexpected 1.2% drop in its second-quarter same-store sales.

Bentonville, Ark.-based Wal-Mart said it earned 88 cents a share in the three months ended July 31 compared to 86 cents a year earlier.

The earnings were at the high end of Wal-Mart's own forecast range of between 83 cents and 88 cents, and topped analysts' consensus expectations of 86 cents a share.

Wal-Mart's revenue for the quarter decreased 1.4% to $100 billion, which the retailer blamed on the negative impact from exchange rate fluctuations.

Analysts surveyed by Thomson Reuters had forecast an increase of 1% in same-store sales.

Given Wal-Mart's dominance in the retailing industry, and the fact that more than 200 million consumers shop at its stores every week, the seller is seen as a barometer of the health of the consumer and of the economy.

While most of its peers have been struggling to grow sales through the recession, Wal-Mart's been one of the lucky few that has grown its market share, as more consumers across all income levels trade down in their discretionary purchases to its value prices.

From April 2008 to April 2009, Wal-Mart reported 13 straight months of same-store sales gains. The company stopped reporting monthly same-store sales in May, moving to a quarterly reporting of its comparable sales.

To that end, last quarter's same-store sales decline marks the first drop in that measure for Wal-Mart in more than a year.

Not worried: However, Wal-Mart executives said in a statement that the company's quarterly performance "has been good, despite headwinds from price deflation, the effects of the recession and currency exchange rates."

"Even though our comparable sales were lower than we had expected, we believe our comparable sales outperformed the retail sector almost in every place that we do business," Wal-Mart CEO Mike Duke said in the company's pre-recorded call to discuss its results.

Duke also said Wal-Mart saw increased foot traffic in its U.S. stores last quarter. The company said its expects third-quarter same-store sales for the 13-week period from Aug. 1 through Oct. 30 to be between flat and up 2%.

For his part, Hoyt said he's not too surprised by the drop in Wal-Mart's same-store sales. He pointed out that the retailer got a big sales lift in the same period last year from the government rebate checks that were given to consumers in an attempt to boost spending.

Last year, Wal-Mart offered free rebate cash checking in its stores in an attempt to grab a bigger share of the rebate money, a strategy that helped pump up its same-store sales 5.8% in June and 3% in July.

"The stimulus that consumers got this year was not concentrated in one quarter but was spread out over the last nine months," Hoyt said.

By Parija B. Kavilanz

What the Fed will say today

The Federal Reserve is expected to announce its plans for interest rates today. Supposedly, the stock market is on hold until the Fed speaks. But it is not even clear why stocks rallied 47 percent since March's S&P 500 low of 676, that the state of the economy has anything to do with it, and whether anything that the Fed says or does will make a difference.

In a TV interview last night, I said that stocks had been rising due to the actions of traders, not investors. There are two games that traders play that have been driving up stocks. One is so-called flash trading, where big institutions hide behind dark pools to anonymize their front-running of orders to major exchanges through super-powerful computers. The second is making bets on earnings outcomes and profiting from short-covering when those results turn out to be better than expected.

I also predicted that the Fed would keep rates where they are because the risks of deflation are still so high that despite putting $23.7 trillion in financial bailout obligations on the U.S.'s balance sheet, the need to raise rates appears far off. Those risks were highlighted in a productivity report that showed output per worker had risen 6.4 percent while unit labor costs fell 5.8 percent.

As unemployment climbs towards 10 percent -- a level it is expected to hit and stay above in 2010 -- this means that workers -- whose spending accounts for 70 percent of economic growth -- will be hard pressed to increase their spending. Moreover, with capacity utilization at 68 percent -- in a strong economy it would be at 82 percent -- the potential to cut more people to boost that utilization rate, remains high.

Sure there are signs that the number of monthly jobless is declining, but as long as we continue to allow speculators -- who account for 81 percent of oil trading -- to place bets on rising oil and a declining dollar there remains some potential for stagflation. Here, all those unemployed people would be forced to pay more for gasoline and other commodities so that Wall Street traders can buy their Maseratis.

So what does this mean for investing in stocks? After getting burned by the dot-com crash, the collapse in housing prices, and last year's 50 percent plunge in global stock prices, individuals are not inclined to buy stocks now -- even if they had any extra cash. Some stocks, like Bank of America (BAC) are up five-fold from their lows, but due to the tens of billions worth of toxic waste on their balance sheets it is still impossible to estimate their future profits or their net worth.

If you're going to look at investing in stocks, consider ones that have earnings growth like Strayer Education (STRA). It has done well in a down market and it was among the best Why? People return to school in a recession and Strayer is making money and it just raised its guidance. Whether the price is right or not I don't know but I think it would be worth looking at.

Meanwhile, the Fed will say that it is keeping rates low, adding liquidity as needed and that it believes the risk of inflation is low as long as the economy remains fragile. The Fed may also point out that it is poised to tighten if the economy starts growing -- but that could be years off.

Update. the Fed just announced that it would leave rates unchanged and that by the end of October it will end a program of injecting liquidity into the economy by buying treasury securities.

Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.

by Peter Cohan

Hawaii is gonna get a storm, and THIS time, we really REALLY mean it! Honest!

Coastal Watches/Warnings and 5-Day Track Forecast Cone

Click image to zoom in – Turn track on – Download GIS data
Click Here for a Printer Friendly Graphic
Note: If a storm is expected to dissipate within 5 days, its track will be shorter

About this product:

This graphic shows an approximate representation of coastal areas under a hurricane warning (red), hurricane watch (pink), tropical storm warning (blue) and tropical storm watch (yellow). The orange circle indicates the current position of the center of the tropical cyclone. The black line and dots show the National Hurricane Center (NHC) forecast track of the center at the times indicated. The dot indicating the forecast center location will be black if the cyclone is forecast to be tropical and will be white with a black outline if the cyclone is forecast to be extratropical. If only an L is displayed, then the system is forecast to be a remnant low. The letter inside the dot indicates the NHC's forecast intensity for that time.

NHC tropical cyclone forecast tracks can be in error. This forecast uncertainty is conveyed by the track forecast "cone", the solid white and stippled white areas in the graphic. The solid white area depicts the track forecast uncertainty for days 1-3 of the forecast, while the stippled area depicts the uncertainty on days 4-5. Historical data indicate that the entire 5-day path of the center of the tropical cyclone will remain within the cone about 60-70% of the time. To form the cone, a set of imaginary circles are placed along the forecast track at the 12, 24, 36, 48, 72, 96, and 120 h positions, where the size of each circle is set so that it encloses 67% of the previous five years official forecast errors. The cone is then formed by smoothly connecting the area swept out by the set of circles.

There is also uncertainty in the NHC intensity forecasts. The Maximum 1-minute Wind Speed Probability Table provides intensity forecast and uncertainty information.

It is also important to realize that a tropical cyclone is not a point. Their effects can span many hundreds of miles from the center. The area experiencing hurricane force (one-minute average wind speeds of at least 74 mph) and tropical storm force (one-minute average wind speeds of 39-73 mph) winds can extend well beyond the white areas shown enclosing the most likely track area of the center. The distribution of hurricane and tropical storm force winds in this tropical cyclone can be seen in the Wind History graphic linked above.

Considering the combined forecast uncertainties in track, intensity, and size, the chances that any particular location will experience winds of 34 kt (tropical storm force), 50 kt, or 64 kt (hurricane force) from this tropical cyclone are presented in tabular form for selected locations and forecast positions. This information is also presented in graphical form for the 34 kt, 50 kt, and 64 kt thresholds.

Note: A detailed definition of the NHC track forecast cone is also available.

8/12 Freedom Watch Video is Posted!

Rep Ron Paul

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Blog reactions

中國‧專家：屬高祖母宣太後‧兵馬俑主人非秦始皇

（中國‧北京）兵馬俑的主人並非秦始皇，而是他的高祖母宣太後？

來自中國南京的72歲古建築專家陳景元，將自己30多年研究成果匯集，寫成《兵馬俑真相：俑坑的主人不是秦始皇》一書，他在書中從服飾、軍事、交通等角度對兵馬俑進行了剖析，指出兵馬俑的主人，很可能是秦始皇的高祖母——把持秦國朝政41年的宣太後。

宣太後是秦惠文王的王后，姓羋，是楚國的王族。秦惠文王死了以後，太後執政41年，史稱宣太後。

沒挖掘到真正始皇陵

陳景元指出，目前還沒挖掘到真的始皇陵，而是在始皇陵附近的宣太後陵。

他說，依照史書記載，始皇陵在新豐縣西南10里，宣太後陵在新豐縣南14里，而目前發掘到的秦俑坑就在宣太後陵的所在。

數十年來，他不斷蒐集資料，實地考證，發現兵馬俑的主人若是秦始皇的話，兵馬俑的一些特徵則成為難解的懸疑。

兵馬俑與戰場士兵不同

陳景元指出，兵馬俑與一般戰場上的士兵不同，不僅沒有戴頭盔，而且梳著奇怪的“歪髻、偏髻”，像是楚國人的髮型。

此外，剛出土的兵馬俑，身上還殘留著一些顏料，由此判斷，他們的衣服應絢麗多彩，不符合秦始皇“尚黑”的政策。

而與兵馬俑一起出土的車輿，寬度不一，尺寸不同，也秦始皇生前要求全國都要“車同軌”不符。

陳景元還提出，陶俑身上刻一個羋字。在宣太後的先生惠文王興建的阿房宮遺址上，也發現了不少羋字，而羋正是宣太後的姓，所以，他認為，目前挖出來的秦俑應該是宣太後的，不是她的玄孫贏政的。

新加坡‧站太久、扛重物‧子宮易下垂‧空姐護士教師首當其衝

（新加坡）站太久、常扛重物，可能令女性出現子宮下垂的問題，空姐、護士、教師首當其沖！

別以為只有生產過的婦女才可能患上子宮下垂，站太久、腹壓大也可讓女性成為“受害者”。

子宮下垂也叫“子宮脫垂”，是指子宮內壁不能良好收縮復原，盆腔韌帶和肌肉鬆弛或退化，不能承托子宮而令子宮下垂到陰道內。

婦產及婦女泌尿專科鐘耀倫顧問醫生受訪時說，因為婦女在懷孕期或分娩期間，支持子宮的韌帶、產道、骨盆等部位的肌肉，都得承受重量壓迫，因而損害到子宮的韌帶和肌肉，所以出現子宮下垂情況的，絕大多數是生產過多次的婦女。

慢性咳嗽肥胖也可導致

但他指出，慢性咳嗽、肥胖，甚至經常長時間站立、常搬或抱重物，也可導致子宮下垂。

“因為腹腔壓力的增加，使骨盆裡面支持子宮的韌帶變松，以致無法再有效的支持子宮在原來正常的位置，而往下掉落。”

“這無形中讓空姐、護士、教師等提高成為患者的幾率，因為她們在職場不但需長時間站著，空姐還須幫助搭客搬行李、教師也須提學生的課本到處走。”

他透露，根據英國最近針對4000多名未分娩過的護士進行的調查，有16.8%有漏尿的情況。這證明子宮的韌帶和肌肉已開始鬆弛，而每兩名有漏尿現象的女性中，就有1名患有子宮下垂。

女性應避免便秘

他認為，平時女性也該避免便秘，因為任何向子宮施加壓力的動作，都會增加患上子宮下垂的幾率。

鐘耀倫醫生建議女性，平常可做收腹提肛運動，鍛煉盆底的肌肉。“感覺就像是在‘憋尿或憋屎’一樣，但千萬不要在如廁時這麼做。”

France and Germany Lift European Economy

FRANKFURT — The European economy bounced back with unexpected strength in the second quarter after contracting sharply at the beginning of 2009, data released Thursday showed, offering the clearest evidence yet that a searing recession is drawing to a close.

The economy of the 27-nation European Union shrank at an annual rate of 1.2 percent in the three months that ended in June, while the 16 countries that use the euro, the common European currency, registered an annualized 0.4 percent decline in economic activity during the period. That contrasted with a shrinkage at an annual pace of 1 percent during the same period in the United States.

Despite being in negative territory, the European data underscore a sharp recovery from the first quarter of this year, when both the E.U. and the euro zone saw a 2.5 percent contraction, or a 10 percent annual rate. Underlying the surprisingly strong reading were solid performances in France and Germany, both of which grew by 0.3 percent in the second quarter, compared to the first, government data showed Thursday.

Germany, Europe’s largest economy, will still probably see its gross domestic product contract by about 6 percent for the full year, economists say. But the surprise expansion — most economists had expected a flat or slightly negative reading — underscores how German exporters are benefiting from growth in Asia and what may be a bottoming of the downturn in the United States.

“An export-driven, ‘V’-shaped recovery in the second half of this year is in the pipeline,” said Andreas Rees, chief German economist at UniCredit.

Germany’s economy expanded 0.3 percent from the previous quarter, ending a run of four straight quarters of contracting output in Germany, putting an end to the nation’s recession in its most technical sense. The modest expansion in the second quarter amounted to an annual growth rate of 1.2 percent.

News last week that German exports leaped 7 percent in June over the previous month foreshadowed a strong reading on gross domestic product.

But unemployment is expected to rise sharply later this year, as a raft of government programs that kept people on private payrolls begin to expire. Despite the recovery, German exports in June were down 22 percent compared to a year earlier.

The unemployment question is feeding a debate among economists about whether Europe will experience a V-shaped recession, or whether rising joblessness will drag down consumption and shake consumer confidence, leading to another dip later this year — a so-called “W-shaped” expansion.

“You might get something resembling a ‘W’ simply because of the strength of the rebound,” said Erik Nielsen, chief Europe economist at Goldman Sachs in London. “It’s almost mathematical after the deep trough.”

The year 2010 will be much more uncertain, and could find Europe lagging behind the United States, where recent data indicated that the recession may have ended. Despite the passage of bank rescue plans and modest stimulus packages, Europe has generally failed to restructure its financial system, most economists argue, portending greater problems next year.

“We will really see the difference in recoveries next year,” said Thomas Mayer, chief Europe economist at Deutsche Bank in London. “That will be when the U.S. bounces back more quickly than Europe.”

By CARTER DOUGHERTY