November Retail Sales Figures Calm Fears of Recession

'Christmas is Christmas'

Retail sales in November rose twice as much as forecasters expected, easing fears of a recession. Wholesale prices rose the most in 34 years.

Retail sales rose 1.2 percent, according to the Commerce Department (via Bloomberg), while separate figures from the Labor Department showed that prices paid to U.S. producers soared 3.2 percent.

Furniture, electronics, building-material, and department stores figures all increased, with only auto dealers and a category called miscellaneous store retailers seeing declines in November. Wal-Mart Stores Inc. says November sales rose within forecasts in November.

The figures are consistent with the Fed’s prediction of two days ago that there will be a moderate expansion next year, though energy and commodity prices may fuel inflation.

Following today’s reports, Morgan Stanley analysts raised their estimate for economic growth for the fourth quarter to 1.2 percent, from 0.2 percent. Bank of America Corp. raised their estimates from 0.1 percent to between 0.5 percent and 1 percent.

“We should still see reasonable sales growth and no recession,” Allan Meltzer, professor of political economy at Carnegie Mellon University in Pittsburgh, is quoted as saying. “It’s quite reasonable to expect high energy prices will slow business investment and, eventually, consumer spending, but people are working, the unemployment rate is low and Christmas is Christmas.”