- Summary: Several economic reports came in yesterday, foremost a report saying overall retail growth eased to just 0.2% in August. Excluding retail figures from auto dealers, growth was also 0.2%, slightly below expectations. But the cooling figures do not worry most Wall Street analysts, who feel that with gas prices falling dramatically at the pump over the last month, retail spending is bound to recover quickly. Every cent less in gas prices, sustained for a year, means an additional billion dollars in disposable cash - money that will likely be poured back into retail. "I think sales could come ripping right back," said Brian Jones, senior economist at Citigroup Inc. "Any talk about us having a soft holiday season is way premature." With a hurting housing market, analysts are relying on retail spending to keep the economy vibrant and growth on pace. In other economic reporting yesterday, the Labor Department said jobless claims fell in the week ended Sept. 9, putting the four-week average at 314,250. The Labor Department also reported that import prices rose 0.8% in August from July. Excluding a jump in the price of imported fuels, import prices were up just 0.2%.
- Comment on related stocks/ETFs: Who stands to gain the most from falling gas prices? A recent WSJ piece posits its discount retailers like Wal-Mart (WMT). The combination of a housing slump and falling gas prices means homeowners will have less to spend, while lower income individuals, for whom gas is a larger segment of their overall budget, will have more. The Result: With a squeeze at the top and a loosening at the bottom, discount retailers win in both cases.
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