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Comparisons to Last Year Make Economic Numbers Look Rosier
Friday, October 09, 2009 10:55 AM


(Source: The Milwaukee Journal Sentinel)trackingBy Doris Hajewski, Milwaukee Journal Sentinel

Oct. 9--Suddenly, it has become a lot easier for the economy to look upbeat.

Consider:

--Retail sales in September moved into positive territory for the first time in more than a year.

--The Dow Jones industrial average is 5.7 percent higher than it was one year ago.

--Analysts expect corporate revenue to begin showing improvement soon over year-ago numbers.

The reason in each case: We have lapped the start of last year's financial meltdown, making it much less difficult for this year's numbers to beat last year's.

"Really, any kind of business activity is going to have really easy comparisons for the next six months," said Ignatius L. Smetek, president and chief investment officer at Milwaukee's Arcataur Capital Management.

Smetek expects a third-quarter turnaround in the Gross Domestic Product and widespread revenue improvement in the fourth quarter.

"I think what we're all experiencing is the economy is stabilizing, and it's going to feel and look a little bit stronger because of these easy comparisons," Smetek said.

The Dow rose 61 points Thursday, adding to the market's already steep climb for the week, as traders pounced on news that retailers last month had their first sales gains in more than a year. Easy comparisons were the primary factor in a 1.1 percent industrywide gain in same-store sales for chains tracked by Retail Metrics, a Massachusetts research firm.

The growing hopes for consumer spending, which is crucial for an economic recovery, followed late Wednesday's good news from Alcoa Inc. The company surprised investors with its first profit in nine months, which the aluminum company attributed to cost-cutting and rising sales to automakers. Its report had many traders betting that companies' results for the July-September quarter, to be released in the coming weeks, will be better than expected.

Locally, Kohl's Corp. raised its forecast for the third quarter after the company reported better-than-expected same-store sales for September on Thursday.

The Menomonee Falls-based retailer stood out among its peers, reporting a sales increase of 5.5 percent at stores open at least a year, well above the 0.6 percent decline that analysts reporting to Retail Metrics were expecting. Chief Executive Officer Kevin Mansell said in a statement that sales were up across the country, but stores in the Southwest drove the gain with double-digit increases.

As a result, Kohl's now expects third-quarter earnings per share in a range of 52 to 54 cents, up from its earlier expectation of 40 to 44 cents.




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