A welcome wave of recent economic signals — record stock prices, soaring home builder confidence, better job prospects and higher-than-expected June retail sales — are reinforcing expectations that the economy continues to grow in ways that can support boat sales.
Specifically, the Federal Reserve chairman's announcement that the central bank will keep supporting the economy by buying bonds "for the foreseeable future" pushed the Dow Jones and S&P 500 to all-time highs. Dubbed the "Bernanke Boost," the rising value of 401(k) accounts and increased family net worth always lead to consumer confidence and spending. In fact, consumer credit is already expanding again.
It's no surprise that the stocks of home builders have been big gainers. In fact, it's reported that the measured confidence of home builders, sensitive to interest rates which Bernanke indicates will be kept low, has shot up to the highest level in seven years, specifically for new single-family home purchases projected during the next six months. The importance of this for the marine industry is that recovery in housing has always been considered a precursor to steady increases in boat sales.
Adding to the surge has been an end to workforce downsizing and, therefore, an improving job market. That helped retail sales in June top expectations. Specifically, same-store sales at retail outlets open at least one year rose 4.1 percent from the same period a year ago, topping the expected 3.7 percent increase and recording the largest increase since sales rose 5.1 percent last January.
In addition, the output of U.S. manufacturers turned out more cars, consumer electronics and business equipment in June for the second straight month. Overall, industrial production (includes factory, mines, utilities) also rose 0.3 percent in June.
Overall, it appears consumers are making up for the cold, disappointing spring all retailers experienced. While the current rising gas prices could slow down the rate of increase in economic activity and spending, it seems pretty clear the economy will continue to expand and consumers will act accordingly.