Household spending may have shown signs of progress but the business sector seems to be slowing down. There are several factors affecting the decline of business growth and among these would be the looming tax increases and fiscal budget cuts and the damage caused by superstorm Sandy to the Northeastern part of the US. These are mixed news for the US economy.
According to the Commerce Department, the increased consumer demand cannot be met by retailers who are just trying to put back the pieces ruined during the superstorm. Damages amounting to millions of dollars are difficult to cover up and these have led to businesses putting off the purchase of additional machinery in order to speed production. With that, the supposedly bright holiday shopping attitude now runs bleak.
An economic analyst explains that at present, the US economy is getting mixed signals. George Mokzran of the Huntington National Bank says that despite the strength of consumer spending, businesses have weakened. This has resulted to the decrease in retail sales – the largest drop experienced for the past four months.
“Affected Areas Couldn’t Quantify Amount of Damage”
Aside from the value of goods and properties damaged during the onslaught of superstorm Sandy, stores from the affected areas also had to close out. This resulted to additional loss or revenue – statistics that is difficult to quantify.
The storms closed out hundreds of stores and even cut back online shopping, which resulted to a reduction of revenue by up to 1 percent. And although most of the stores were reopened after 10 days from the date of the disaster, the damage has already been done.
Even the otherwise strong auto industry fell following Sandy’s aftermath. Reports indicate that a loss of about 14.2 million has been recorded since the superstorm happened during what the busiest month for the auto industry was supposedly.
The Commerce Department also added that the sale of durable goods went down by up to 0.6 percent since roads were inaccessible after Sandy’s onslaught. This resulted to a delay and eventual cancellation of deliveries from warehouses to stores.
Nevertheless, optimism continues that the Northeast will fully recover before this year ends. As of the moment, more job opportunities have been noted. Home values went up and consumer confidence has been regained brought about by strength in finances. Apparently, the pent-up consumers would most likely get back into buying if their needs will be met by retailers. The forthcoming Holiday season also has to be thanked for the healthy buying market.