WASHINGTON — A host of factors dampened consumer spending and translated into sluggish sales in September and early October, including a tumultuous stock market, the threat of war with Iraq and the West Coast port lockout, the Federal Reserve reported Wednesday.
This story first appeared in the October 24, 2002 issue of WWD. Subscribe Today.
“Retail sales were weak across the nation,” stated the Fed report known as The Beige Book, a survey of business executives in the Fed’s 12 districts.
With the exception of discounters, which reported year-over-year sales increases, most retailers were “surprised” that sales this September and October were poorer than in 2001, “given the lost sales due to the terrorist attacks last year,” the Fed report said.
In New York, retail sales were “well below plan and inventories were higher than desired,” according to the report. Major New York chains reported that same-store sales ranged from a 7 percent decline to a 5 percent gain, though the year-earlier figures were depressed by the Sept. 11 attacks — particularly for stores in New York City.
“As has been the case for months, apparel sales were especially sluggish, and warm weather was seen as only a minor factor,” the Fed said.
In addition to unexpectedly weak sales, some retailers said they accumulated extra inventories in anticipation of the West Coast dock lockout, and many said they expected some fall-out from the West Coast port shutdown in coming months. President Bush ordered dockworkers and shippers back to work this month under the Taft-Hartley Act and obtained an injunction for an 80-day cooling off period.
In Cleveland, retailers resorted to shipping goods by air, which resulted in increased costs and a “pessimistic outlook,” the Fed reported. That wasn’t the only thing on their minds, however.
“Retailers believe that the uncertain international environment, shaky consumer confidence, and the declining stock market all contributed to poor conditions,” the Beige Book reported.
In Philadelphia, the story was the same. “A slow sales pace was reported across most lines of merchandise, and clothing sales at department stores and apparel stores were particularly poor,” the report said.
Consumer spending was also weak in the Minneapolis area. Same-store sales were off 1 percent at a Minneapolis-based department store, while traffic and sales were down anywhere from 1 to 5 percent in September at malls.
In related news, Federal Reserve chairman Alan Greenspan said Wednesday that U.S. productivity should continue to post solid gains in coming years, although not at the level of this year’s surge. Greenspan said the increase in productivity, the amount of output per hour of work, for this year “will almost surely be reported as one of the largest advances, if not the largest, posted over the past 30 years.”
Through the 12 months ending in June, productivity for nonfarm workers has risen by 4.8 percent, the biggest increase for a 12-month period since 1983.