UPDATE: Don't be surprised by economic mood swings

This morning’s news is filled with evidence to support a notion we’ve offered here on several occasions: Just as the recession hit some people (and companies) harder than others, economic recovery will move farther and faster for some people (and companies) than others. (See “Saving money on one thing to subsidize another,” or “The (effect of) the recession is (not) over.”)

Last night, there were several reports of improved retail sales for the month of October, primarily at discount, club, and mass-merchandise stores… but also for some more upscale retailers. (Click here to see the story that ran in the Wall Street Journal last night; to see a graphic about monthly year-to-date sales comparisons, click on this link to the New York Times.)

This morning, though, news that unemployment had hit 10.2% in the U.S. dampened that positivity, though. By 8:15 a.m., the Minneapolis Star Tribune had published an Associated Press story about a resulting drop in worldwide stock prices.

Implications: First, with regard to retail sales, October sales results indicate that the middle might be a tough place to live, for a while. Sales were up first and continue to perform at discount retail… and now, there are finally signs of improvement at many upscale stores, too. (If you live in the middle, with a less defined position, it seems like the verdict is still out.)
Secondly, this collection of news reports reinforces that an economic recovery will likely include numerous ups-and-downs (as we have offered here as early as last June and as recently as last month.)

That said, I’m surprised at the stock market reaction to the unemployment news today; the double-digit number had been predicted for months. People knew it was coming. Hopefully, an “Oh yes, we’ve talked about that already” attitude will prevail soon… allowing investors to calm and markets to rebound quickly.

For those who are unemployed, or whose incomes are otherwise impacted, times are still tough. For those families who have been doing fine all along, it seems like they’re finally starting to feel like they can return to shopping, to some extent, and not feel bad about it.

Mike Anderson