Auto sales drive retail levels up

Many economic analysts are hoping current retail sales levels and falling consumer spending only indicate a stalled economy and not a prolonged recession. But increased retail sales levels might only be a reflection of more aggressive automobile sales.\nRecently the Commerce Department released the October retail sales level. The level surged 7.1 percent. The 28.5 percent increase in auto sales was the major contributor to October's new retail sales record. The retail sales level excluding auto sales was only 1 percent. \n Briefing.com , a well respected web-based business environment analysis team, said that auto sales were the "swing factor" in this monthly figure.\nThe surge in auto sales is mainly due to the manufacturer's aggressive actions to lower the accumulating old inventory levels in the fear of pessimistic future sales expectations. Recently, many auto retails are offering sales with extreme payment options of around zero percentage financing. \nSome experts expect that this unusual phenomenon in auto sales would only be temporary. \n"The auto aberration will fall off in December and the beginning of the next year's first quarter," said a report on Briefing.com \nThe 1 percent increase in retail sales gives a contrasting image when compared to recent levels of consumer confidence. Briefing.com said in its report that the retail sales increase does not indicate a recovery for the recession, but rather indicates delayed consumers' purchases for September. \nRecent bullish performance in the stock market might indicate an economic recovery from recession is near at hand. This expectation is especially emphasized by the investment banking industry encouraging more investments from clients and potential investors. \nMerrill Lynch believes this is currently the middle point of the recession, and the stock market is likely to perform well. Recently Merrill Lynch disclosed historical data on their Web site that supports their claim that markets historically start to pick up around the middle of a recession.\nMerrill Lynch also said in its Weekly Economic & Financial Commentary, "monetary policy operates with a lag of about nine months. It would only be around this time that the Fed's initial rate cuts would begin to impact activity."\nInterest rates were recently lowered to a 40 year low.\nStandard & Poor's Special Report said, "(The economy is) closer to a recession now and thus closer to the beginning of a new expansion phase. The aggressive interest cuts should start boosting the economy soon."\nBut many investment banks have been cutting spending and finishing mergers and acquisitions in order to grab market shares during the tough economic environment. Business Week recently reported several large investment banks are planning to layoff 10 percent of their workforces.\nHorst Köhler, Managing Director of the International Monetary Fund, said Thursday, "There is still the uncertainty about how layoffs will further influence business activity. So altogether there are good reasons to predict a downturn in the U.S. economy. But there are now even more good reasons to believe that a recovery will take place"