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Show RGtoilino Performance, Prospscts Encouraging 4 Recent trends in retail sales ould appear to aueur well or the economy in the period Jirectly ahead. m MANY OBSERVERS are !ooking forward to new 0 lollar-volume records in 1976 hat would give business a big ift. However, there are also ftjome doubters who point out liche recent slowdown in the rt growth of installment debt as . vidence that consumers are rL-ot all that confident. In In any event, Christmas lm;,usiness topped retailers' expectations ex-pectations and total ecember sales jumped $1.75 illion to a seasonally adjust-1 adjust-1 $52.1 billion. m in s THIS MARKED the fourth lte'insecutive month in which wn tail sales chalked up gains, its-nd December trade was a insiiopping 15.5 percent above at for the same month in ifar.74. Figures from the Department Depart-ment of Commerce show that tail sales for all of 1975 rose 7.02 billion-or 8.7 percent -. a total of $584.8 billion. !nB:sults for 1974 had been so Preappointing that the gain in l'IMIar volume did not even fset that year's inflation H-Ste. oiecn tatiiTHE GAINS we have seen kill i retail trade over recent ;ijt:onths. and particularly s()(Dse of the past several E:eks, suggest that con- mers are overcoming their iriness of the future, even High they are not yet ready iblek g0 on prolonged spending icaiiSrees. bit ?It is important to keep in rewind that personal savings e at high levels and that, jrstihough over 8 percent of the s0 Kirk force is still .jngjemployed, consumer buy-tic buy-tic rS power is a mighty gnomic dynamic that is still panding. , IT WILL grow in strength is- th the attainment of addi-inal addi-inal increases in total lployment as well as in tfrsonal income. And it will itinue to be buttressed by ; massive, regular in-.pions in-.pions that come from the G 'rious government transfer yments. ANALYSIS OF pertinent data by the Research Department Depart-ment of Babson's Reports indicates in-dicates that the buying power of consumers will continue to rise at least through the first half of this year, and at a rather good clip. Consumer attitudes will also al-so be favorable to spending, on average, even if-as we expecta ex-pecta new wave of price increases occurs following upcoming major labor contract con-tract negotiations. UNDERLYING consumer psychology will be positive as long as personal income and employment are rising and for some time thereafter, for retail-sales changes tend to lag behind shifts in the overall economy. But there are degrees of positivity, and it may be some months before the marked improvement in consumer psychology that we now see expands into more vigorous buying activity that will greatly increase the tempo and sweep of the business recovery. WHAT HAPPENS this Bicentennial year-in the economy as a whole as well as in retailing-will depend in large measure on what the federal government does in the areas of money supply, spending, and tax policy. It will also depend on how management and labor, with or without government help, resolve the large number of contract renewals coming up during the months ahead. FOR SIGNS of things to come in business and retailing, re-tailing, keep a sharp eye out for changes in money rates and for government moves designed to make money and credit harder to get. Watch for signals that particular industries in-dustries are overproducing or that they have added more productive capacity than they can profitably utilize. SYMPTOMS of this sort will now show up until nearer the middle of the year, and even then they may well be slow to develop. This does not mean, however, that these perils can safely be ignored, because they-together with the eventual even-tual squeeze on profit margins-are the rocks on which retailing could stumble later in the year. |