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Economy in Brief

Chain Store Sales Slide Big
by Tom Moeller June 29, 2004

Chain store sales fell a huge 1.2% last week, the largest one week decline since late March, according to the International Council of Shopping Centers (ICSC)-UBS.

The decline in this the last full week of June pulled month-to-date sales 0.7% below the May average.

During the last ten years there has been a 59% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.

The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

Improvement in sales may be portended by the recent slide in petroleum prices. Brent crude oil dropped yesterday to $33.25 on news of the Iraq power handover. Crude prices are down further today, off 15% from the May peak of $39.07.

ICSC-UBS (SA, 1977=100) 06/26/04 06/19/04 Y/Y 2003 2002 2001
Total Weekly Retail Chain Store Sales 434.7 439.8 4.2% 2.9% 3.6% 2.1%
Consumer Confidence Rose to 2-Year High in June
by Tom Moeller June 29, 2004

The Conference Board’s Index of Consumer Confidence for June rose 9.5% to 101.9 versus Consensus expectations for a slight rise to 95.0. June was the highest confidence level since June 2002. May was little revised.

During the last ten years there has been a 55% correlation between consumer confidence and the y/y change in nonfarm payrolls.

The present situation index surged 15.8% to 104.8 (+63.2% y/y). The index of consumer expectations also was firm, up 5.5% to 100.0 (+3.7% y/y).

Jobs were viewed as hard to get by 26.5% of respondents. That was down from 30.3% the prior month and was the lowest level since September 2002.

Expectations for business conditions in six months rose further in June following increases in the prior two months.

The June Confidence reading was firmer than the June reading of Consumer Sentiment reported by the University of Michigan.

During the last ten years there has been a 67% correlation between the level of consumer confidence and the y/y % change in real PCE.

The Conference Board’s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

Conference Board June May Y/Y 2003 2002 2001
Consumer Confidence 101.9 93.1 22.0% 79.8 96.6 106.6
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