Poor United States retail sales hammer dollar

A strong United States dollar is slowing growth and stalling manufacturing according to a report released by the Federal Reserve. There was also a distinct lack of skepticism by employers about the near term outlook with many districts reporting that they now have labor shortages, particularly in skilled labor but without significant wage pressures. Most districts reported modest economic activity, while two districts reported increased activity and one district noted a slight decline in economic activity.

Also, the U.S. Dollar will likely continue its strengthening vs. foreign currencies, such as the euro and yen, which can provide a boost to those export-oriented markets.

Fed Chair Janet Yellen and other Fed officials have criticized those calls as having the potential to tie the central bank’s hands during future economic crises. Combined with disappointing economic reports earlier in the day, Wal-Mart’s forecast and the Fed’s Beige Book survey amplified deep concerns about the outlook for a US economy that has looked shaky since October. 2 employment report disappointed.

Unexpectedly poor U.S. retail sales data hammered the dollar Wednesday as traders viewed prospects weakening for a Federal Reserve interest rate increase this year.

Minutes from the regional Fed board of directors’ September discount-rate meetings, released Tuesday, paint a picture of regional banks that are eager to begin tightening monetary policy. As expected, department stores-the Charlie Brown of the modern retail world-barely eked out any kind of year-over-year gain in sales in September: up 0.2 percent. The Beige Book will be used by the central bank in deliberations for the October interest-rate-setting meeting.

The report comes as Federal Reserve officials are struggling to decipher mixed economic signals as they weigh when to raise interest rates, which have been pinned near zero since the recession.

Credit conditions were generally positive with declining delinquencies and improving loan quality broadly reported.

The Dow Jones Industrial Average dropped by 157.14 points or 0.92 percent to 16,924.75, Nasdaq was down 13.76 points or 0.29 percent 4,782.85, while the S&P 500 lost 9.45 points or 0.47 percent to 1,994.24. That’s a little ahead of the paltry rate of inflation, though if you remove cars from the calculations, the annual growth rate was only 0.8 percent.