Abercrombie & Fitch and American Eagle

The article reports that U.S. retail stores have posted only a modest increase in sales of 2.5 per cent for May, which might be a sign that consumers are taking a break from shopping.This figure was 3.3 per cent for January, 4 per cent for February, and 4.8 per cent for March and April combined. High-end retailers (such as Saks, Nordstrom, TJX Companies and Ross Stores) and apparel stores did well, and discount chains (such as Costco, BJ’s Wholesale, Fred and Target) reported the strongest sales growth of any sector with a 5.3 per cent increase.Shops selling teenager clothing (such as Abercrombie & Fitch and American Eagle) suffered a decline. Reasons behind the slowdown are believed to be bad weather at the beginning of the month and the late Memorial Day, since some companies choose to include Memorial Day weekend sales into their June reports.Analysts believe that lackluster sales might be a sign that recoveries come in waves. Stronger growth is expected during the summer m onth, due to pent-up demand and start of the school year.The importance of the article is associated with the fact that retail sales are a good indicator of the pace of economic recovery. Sharp contraction of consumer spending has exacerbated the recent financial downturn, and it took a long time for spending to rebound. Consumer spending is used as an indicator of economy’s health because it is first of all related to consumer expectations and confidence levels.Furthermore, it indicates whether economic resources flow freely among various economic agents: companies need sales revenues to expand their production, which in turn leads to job creations, and decreasing unemployment levels mean that more people have disposable income to spend at stores. Coming back to the issue of consumer confidence, if citizens are optimistic about prospects of the economy, they tend to spend even more, propping up the production-consumption cycle.Works citedHauser, Christine. â€Å"U.S. Retail ers Report Lackluster Sales Gains.† 3 Jun. 2010. New York Times. 5 Jun. 2010. Web.