US retail sales rise due to successful cash for clunkers scheme
The Commerce Department has today revealed a rise in US retail sales for the month of August, helped by the US Government’s Car Allowance Rebate System (CARS), branded the “cash for clunkers” scheme.
Retail sales rose by 2.7% in August, compared with July and was the biggest monthly gain since January 2006. However, on an annual basis, sales fell by 5.3%.
The popular “cash for clunkers” scheme, which was designed to help bring the US economy out of recession by boosting new car sales, gives car owners federal subsidies of up to $3,500 for trading in their old cars for new ones.
However, the scheme has now ended after the $3 billion funding set aside for it ran out.
Commenting on the retail sales figures, David Sloan at 4Cast comments: “The retail sales obviously was inflated by the cash for clunkers, and the autos rise is going to be reversed.”
In the meantime, US producer prices rose by 1.7% in August – more than expected, due to a 23% rise in petrol prices – the biggest in over a decade, figures from the Labour Department showed.
In other news, US Federal Reserve chairman, Ben Bernanke, has today said: “From a technical perspective, the recession is very likely over.”
Mr Bernanke’s comments come one year after the collapse of US bank Lehman Brothers.
However, earlier this month, Nobel Prize-winning economist Joseph Stiglitz expressed his concern for a “double-dip” recession in the US.
Mr Stiglitz, who said he has been consulted on an informal basis by the Obama Administration to discuss economic issues, said “the prospects of a robust recovery are very, very weak”.
Mr Stiglitz, who is also a former World Bank chief economist, said there was a “significant chance” that the economy could shrink again after a period of low growth.
In his gloomy assessment, he also said: “It is not possible to predict whether we have a malaise or a W (shaped growth pattern). But there is a significant chance of a W.”
In related news, the US unemployment rate has hit a 26-year high of 9.7% after figures revealed that 216,000 jobs were lost in August.
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