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Juli Niemann: Retail sales in January show small increase

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JEREMY HOBSON: Well the Commerce Department said this morning that retail sales rose for a seventh straight month in January. But the .3 percent jump was not as much as economists were expecting.

Let’s get some analysis now from our regular Tuesday guest, Juli Niemann. She’s an analyst with Smith Moore and Company and she’s with us from St. Louis. Good morning.

JULI NIEMANN: Good morning Jeremy.

HOBSON: So a small rise in retail sales, but a rise nonetheless. Is this good news?

NIEMANN: Well, economists are thinking this is going to be the real source of recovery here. Consumer spending and business spending. They’re going to lead us out of the economic desert. But if you take a look at the back of it, it’s really consumer sentiment that’s very lackluster, and it’s stratified. You’ve got confidence in the upper end, job security, they’ve got income. Not so much in the lower end — jobs are slowly coming back and paying off debt, but lack luster retail sales we saw was partially do to weather. And January post-holiday season is always somewhat slower. But what they did buy — gas, food and automotive parts. And what do we see there? Well price increases, not huge demand, we’re just paying more for it. Now one bright spot was online shopping. You really get free shipping and you fill your place up with more stuff.

HOBSON: All right well Juli I want to focus on that price increase thing you just said. We saw this morning that China said that food prices in China jumped 10 percent last month. Is that something that we’re going to be seeing in this country — price increases that are that high and is that related to our own price inflation?

NIEMANN: Well, we’re seeing inflation alerts all over now. It’s on every single newspaper accept the cover of the Rolling Stone. But what we are seeing right now — demand in the United States, in China and in Europe — that’s picking up definitely. In China you’re having creeping affluence, people getting more affluence and they’re changing their diet. So it’s real demand there. Weather is a problem for inflation too. Crop problems, drought and flood. But the biggest thing is globally the central banks flooded the system with all kinds of money. It worked well in Asia, really stoking inflation, not so much here. So now that you’re seeing a big turn around and they’re starting to raise interest rates. Food prices are going up. We’re seeing clothing prices — price of cotton — going up 10 percent. And polypropylene. That’s gone up two times. So this is all built into the system. We know those prices are going up, but it really is global demand rather than big demand here.

HOBSON: Juli Niemann of Smith Moore and Company. Thanks so much for your time.

NIEMANN: You bet.

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