Originally Published: August 4, 2011 10 p.m.
If we're to learn anything about the financial reports that came out Thursday, it's that our economic turmoil is far from over. Consider Thursday's wild ride.
Retailers reported July revenue had exceeded Wall Street estimates. A preliminary tally of retailers' revenue was up 4.6 percent, a slower pace than June's gain but in line with forecasts. The study was conducted by The International Council of Shopping Centers, a 54-year-old industry trade association with 60,000 members in the U.S., Canada and more than 80 other countries.
Back-to-school shopping was the main boost. And while industry watchers are cautious about the school boost lasting beyond late summer, there was reason for optimism. "Early going, July looks like it's shaping up to be a solid month despite all the economic headwinds," said Ken Perkins, president of RetailMetrics LLC, a research firm.
So global retailers are reporting that consumers are shopping beyond expectations. That means more sales tax revenue for coffers. That means confidence.
Then came Thursday's much bigger news.
The Dow Jones lost more than 500 points to crack the Top 10 of its steepest declines ever in the financial markets' worst day since the 2008 crisis. All three major indexes tumbled more than 4 percent and erased all their gains for the year. Stock losses, of course, take a toll on consumer confidence and discourage spending, and consumer spending makes up 70 percent of the U.S.'s economic output. Ken Perkins' soundbites were quickly upstaged by Bill Stone, PNC Financial's chief investment strategist. "We are continuing to be bombarded by worries about the global economy."
Americans don't know which way to turn. Confusion used to reign one day to the next, but Thursday's fiduciary yin-yang meant consumers and investors changed their tunes one hour to the next. And at the end of the day, the analyses about what happened were as varied as the markets themselves.
Are stocks priced too high to begin with? Possibly, according to some of the more optimistic reasoning. One senior stock strategist told the AP on Thursday not to expect a repeat of 2008. "We don't have a liquidity crisis, we don't have a credit crisis - this is just profit-taking." When reached Thursday, Prescott financial adviser Andy Tomlinson likened the day's Dow action to "a correction."
So what does all this mean for John Q. Citizen? Check your 401K portfolio before answering.