FILE – In this Dec. 13, 2011 file photo, Brad Cheskes of Chicago, shops at the Macy’s on State Street store in Chicago. Retail sales barely rose in December, but the gain was enough to push sales to a record level for 2011. It was the largest annual increase in more than a decade. (AP Photo/Charles Rex Arbogast, File)

FILE – In this Dec. 13, 2011 file photo, Brad Cheskes of Chicago, shops at the Macy’s on State Street store in Chicago. Retail sales barely rose in December, but the gain was enough to push sales to a record level for 2011. It was the largest annual increase in more than a decade. (AP Photo/Charles Rex Arbogast, File)

Verizon Wireless recruiters interview job candidates for sales, retail and management positions at a HireLive career fair in Los Angeles Tuesday, Jan. 10, 2012. (AP Photo/Damian Dovarganes)

FILE – In this Dec. 2, 2011 file photo, people wait in line to enter a job fair, in, Portland, Ore. More people sought unemployment benefits last week as companies let go of thousands of workers hired for the holiday season. (AP Photo/Rick Bowmer, File)

In this Jan. 10, 2012 photo, Aramark service managers, Randy Nelson, (left) and Brittany Howard (center) interview job seekers at the HireLive career fair in Los Angeles. More people sought unemployment benefits last week as companies let go of thousands of workers hired for the holiday season. (AP Photo/Damian Dovarganes)

WASHINGTON (AP) ? America’s retailers enjoyed a record 2011 and their first $400 billion sales months ever. But the final month of the year was a dud.

Sales eked out a 0.1 percent increase in December, lifting sales to a seasonally adjusted $400.6 billion.

It was the second straight month that sales have topped $400 billion. The government revised November sales to show a 0.4 percent gain, twice the original estimate.

December’s increase, though, was the weakest in seven months. Excluding volatile auto purchases, overall sales actually fell 0.2 percent. It was the first such drop since May 2010.

But analysts said they still expect consumers to help the economy strengthen further, especially because businesses have stepped up hiring. More jobs mean more people with money to spend.

“Although consumer spending is not particularly robust, households do continue to spend and provide moderate support for the overall economy,” said Steven Wood, chief economist at Insight Economics.

For all of 2011, sales totaled a record $4.7 trillion. That was a gain of nearly 8 percent over 2010 ? the largest percentage increase since 1999.

Steady sales gains have fueled a 20 percent surge from the low during the Great Recession. Monthly sales are even 6 percent above their pre-recession high. The figures confirm evidence that the economy was strengthening as 2011 ended.

Part of the reason for December’s weak showing was lower gasoline prices. Those prices reduced sales at gasoline stations by 1.6 percent. Excluding gas stations, overall retail sales would have risen 0.3 percent in December.

Another factor was heavy discounting during the holiday shopping season. Many retailers said they had to offer cut prices in December to attract shoppers.

The sluggish retail-sales data followed a report this week that consumers raised their borrowing in November by the most in a decade. That suggested that many might have charged more spending to their credit cards because their pay has all but stagnated. The savings rate has also declined.

Continued job growth may be needed to sustain spending increases.

In the meantime, Thursday’s news “reminds us that the economy is still struggling,” said Michelle Meyer, an economist at Bank of America Merrill Lynch. “This is the recovery of fits and starts.”

Separately, more people applied for unemployment benefits last week, the government said. Applications rose 24,000 to a seasonally adjusted 399,000. But the gain was largely due to companies letting go of workers after the holiday season.

Economists downplayed the increase. It followed three months of declines that had reduced the number of unemployment applications to their lowest level in more than three years.

And businesses increased their stockpiles in November to meet rising consumer demand. That gain likely boosted economic growth in the final months of 2011. Companies are rebuilding stockpiles after cutting them last summer amid fears of another recession. It means many anticipate higher consumer spending.

The government’s retail sales report showed that holiday discounts helped push department store sales down 0.2 percent in December. A category that includes department stores like Macy’s and big chains such as Wal-Mart showed an even larger drop last month: 0.8 percent.

Compared with the same time last year, retail sales have risen 6.4 percent.

An earlier survey of 25 major retail chains by the International Council of Shopping Centers found that revenue in December at stores open at least a year rose 3.5 percent over the same month a year ago.

That survey’s figures aren’t adjusted for seasonal changes; the government’s sales figures are. The government report is also a broader gauge. It covers purchases at all retailers, not just at major national chains. It also includes auto dealerships, restaurants and bars, grocery stores and gasoline stations.

The strength last month was led by a 1.5 percent jump in auto sales. Furniture store sales rose 1 percent. Hardware stores reported a 1.6 percent increase. But sales at electronics and appliance stores sank nearly 4 percent.

The government’s retail sales report is its first look each month at consumer spending, which accounts for roughly 70 percent of economic activity. A healthy report typically signals a stronger economy.

Compared with the same time last year, retail sales have risen 6.4 percent.

This week, the Federal Reserve issued a report saying the final six weeks of 2011 were among the economy’s best last year. The report pointed to higher holiday and auto sales, along with increased travel.

U.S. automakers have said that November and December were their two best sales months in 2011. Their U.S. sales rose 10 percent to 12.8 million in 2011, a 23 percent jump from the recession year of 2009.

The job market has brightened, too. Employers added 200,000 jobs in December. And the unemployment rate fell to 8.5 percent, the lowest in nearly three years.

Because the government’s retail sales report is seasonally adjusted, the current month can be compared with the previous month. But the figures aren’t adjusted for inflation.

A separate government report each month measures consumer spending. It’s an even more inclusive gauge. It covers all spending at retailers ? for both durable goods like cars that are expected to last for years and nondurable goods such as food.

This report also covers spending on services. Services include items such as doctor’s visits, airline tickets, apartment rentals and utility bills. The service category makes up two-thirds of consumer spending and isn’t covered in the retail surveys.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/3d281c11a96b4ad082fe88aa0db04305/Article_2012-01-12-Economy/id-53a83ed2f6684954aacdcb8bbea45e33

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WASHINGTON (AP) ? The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt.

The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday.

While people typically accumulate assets as they age, this wealth gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation.

The analysis reflects the impact of the economic downturn, which has hit young adults particularly hard. More are pursuing college or advanced degrees, taking on debt as they wait for the job market to recover. Others are struggling to pay mortgage costs on homes now worth less than when they were bought in the housing boom.

The report, coming out before the Nov. 23 deadline for a special congressional committee to propose $1.2 trillion in budget cuts over 10 years, casts a spotlight on a government safety net that has buoyed older Americans on Social Security and Medicare amid wider cuts to education and other programs, including cash assistance for poor families.

“It makes us wonder whether the extraordinary amount of resources we spend on retirees and their health care should be at least partially reallocated to those who are hurting worse than them,” said Harry Holzer, a labor economist and public policy professor at Georgetown University who called the magnitude of the wealth gap “striking.”

The median net worth of households headed by someone 65 or older was $170,494. That is 42 percent more than in 1984, when the Census Bureau first began measuring wealth broken down by age. The median net worth for the younger-age households was $3,662, down by 68 percent from a quarter-century ago, according to the analysis by the Pew Research Center.

Net worth includes the value of a person’s home, possessions and savings accumulated over the years, including stocks, bank accounts, real estate, cars, boats or other property, minus any debt such as mortgages, college loans and credit card bills. Older Americans tend to hold more net worth because they are more likely to have paid off their mortgages and built up more savings from salary, stocks and other investments over time. The median is the midpoint, and thus refers to a typical household.

The 47-to-1 wealth gap between old and young is believed by demographers to be the highest ever, even predating government records.

In all, 37 percent of younger-age households have a net worth of zero or less, nearly double the share in 1984. But among households headed by a person 65 or older, the percentage in that category has been largely unchanged at 8 percent.

While the wealth gap has been widening gradually due to delayed marriage and increases in single parenting among young adults, the housing bust and recession have made it significantly worse.

For young adults, the main asset is their home. Their housing wealth dropped 31 percent from 1984, the result of increased debt and falling home values. In contrast, Americans 65 or older were more likely to have bought homes long before the housing boom and thus saw a 57 percent gain in housing wealth even after the bust.

Older Americans are staying in jobs longer, while young adults now face the highest unemployment since World War II. As a result, the median income of older-age households since 1967 has grown at four times the rate of those headed by the under-35 age group.

Social Security benefits account for 55 percent of the annual income for older-age households, unchanged since 1984. The retirement benefits, which are indexed for inflation, have been a consistent source of income even as safety-net benefits for other groups such as low-income students have failed to keep up with rising costs or begun to fray. The congressional supercommittee that is proposing budget cuts has been reviewing whether to trim college aid programs, such as by restricting eligibility or charging students interest on loans while they are still in school.

Sheldon Danziger, a University of Michigan public policy professor who specializes in poverty, noted skyrocketing college tuition costs, which come as many strapped state governments cut support for public universities. Federal spending on Pell Grants to low-income students has risen somewhat, but covers a diminishing share of the actual cost of attending college.

“The elderly have a comprehensive safety net that most adults, especially young adults, lack,” Danziger said.

Paul Taylor, director of Pew Social & Demographic Trends and co-author of the analysis, said the report shows that today’s young adults are starting out in life in a very tough economic position. “If this pattern continues, it will call into question one of the most basic tenets of the American Dream ? the idea that each generation does better than the one that came before,” he said.

Other findings:

?Households headed by someone under age 35 had their median net worth reduced by 27 percent in 2009 as a result of unsecured liabilities, mostly a combination of credit card debt and student loans. No other age group had anywhere near that level of unsecured liability acting as a drag on net worth; the next closest was the 35-44 age group, at 10 percent.

?Wealth inequality is increasing within all age groups. Among the younger-age households, those living in debt have grown the fastest while the share of households with net worth of at least $250,000 edged up slightly to 2 percent. Among the older-age households, the share of households worth at least $250,000 rose to 20 percent from 8 percent in 1984; those living in debt were largely unchanged at 8 percent.

On Monday, the Census Bureau planned to release new 2010 figures that will show a big increase in poverty for Americans 65 or older due to rising out-of-pocket medical expenses. Currently, about 9 percent of older Americans fall below the poverty line, based on the official definition put out in September, but that number did not factor in everyday costs such as health care and commuting.

The new supplemental figures will show poverty to be higher than previously known for several groups, although they may not fully reflect longer-term changes. For instance, a recent working paper by the National Bureau of Economic Research found that U.S. spending on the safety net from 1984 to 2004 shifted notably toward programs benefiting the near-poor rather than the extreme poor and to the elderly rather than younger adults. That trend, which has continued since 2004, has led to faster increases in poverty over time for some of the underserved groups.

Robert Moffitt, a professor of economics at Johns Hopkins University and co-author the paper, cited a series of cuts in government programs since 1984 for the neediest, including welfare payments to single parents and the unemployed under the Temporary Assistance for Needy Families program, while Social Security and Medicare have either been expanded or remained constant.

“Over time, even under a revised poverty measure, the elderly have done better,” he said.

___

Online:

Census Bureau: www.census.gov

Pew: http://pewsocialtrends.org

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/386c25518f464186bf7a2ac026580ce7/Article_2011-11-07-US-Wealth-Gap-Young-and-Old/id-155f9f09cc9b451c9b6368f4f6729ff1

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