Tag Archives: Economics reporting

Obama economy

Obama focuses on the economy

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In his State of the Union address Tuesday, President Barack Obama took the time to call for increasing the minimum wage, reducing the income gap and stimulating economic recovery. While the speech covered many topics, including health care and the war in Afghanistan, it’s telling that more than five years after the financial crisis, the economy remains top of mind.

Peter Baker wrote for the New York Times that Obama “declared independence from Congress”:

But the main thrust of Mr. Obama’s message was the wide gap between the wealthiest and the rest of America, and he used the speech to position himself as a champion of those left behind in the modern economy. “Those at the top have never done better,” he said. “But average wages have barely budged. Inequality has deepened. Upward mobility has stalled.

“The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by, let alone to get ahead,” he added. “And too many still aren’t working at all. So our job is to reverse these trends.”

 To do so, the president announced an executive order raising the minimum wage to $10.10 an hour for future federal contract workers and the creation of a new Treasury bond for workers without access to traditional retirement options. He proposed incentives for trucks running on alternative fuels and higher efficiency standards for those running on gasoline. And he announced a meeting on working families and a review of federal job training programs.

Mr. Obama was gambling that a series of ideas that seemed small-bore on their own would add up to a larger collective vision of an America with expanded opportunity. But the moderate ambitions were a stark contrast to past years when Mr. Obama proposed sweeping legislation to remake the nation’s health care system, regulate Wall Street, curb climate change and restrict access to high-powered firearms.

The top of the Wall Street Journal story by Carol E. Lee and Peter Nicholas also focused on Obama’s declaration to bypass Congress whenever possible:

President Barack Obama, seeking to restore confidence in his leadership, declared in his State of the Union address Tuesday that he would use executive power to try to narrow the gap between rich and poor and speed the nation’s economic recovery.

Mr. Obama’s speech was essentially a manifesto designed to inject new vigor into his languishing agenda and guide his presidency through the partisan divide in the capital. The goal was to position the president as the champion of struggling Americans fed up with the bickering in Washington, marshaling an array of policy proposals aimed at helping them save more, earn more and find work in a tough economy.

“Corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged,” Mr. Obama said. “Inequality has deepened. Upward mobility has stalled…Our job is to reverse these trends.”

The president told the joint session of Congress that “I’m eager to work with all of you,” but his message was clear: “Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.”

A USA Today analysis by Susan Page said the president’s speech reflected a “political journey from the aspirational to the achievable”:

This time, the president announced a pledge by some top corporate CEOs not to discriminate against job seekers who have been out of work for a long time and unveiled an executive order raising the minimum wage for new federal contract workers. “Give America a raise,” he said, urging Congress to raise the base wage for everyone.

He called reducing economic inequality and restoring upward mobility “the defining project of our generation.” He repeated the word “opportunity” a dozen times. He spoke energetically and more quickly than he typically does in big speeches.

But on that same platform in 2013, his proposals were more sweeping and his threat of political leverage more muscular. “Now is the time to do it; now is the time to get it done,” he said then of overhauling immigration laws. On offering quality preschool to every child in America: “That’s something we should be able to do.” On raising the minimum wage: “We should be able to get that done.” On simplifying the tax code: “We can get this done.”

Politico’s Josh Gerstein and Darren Samuelsohn wrote a piece fact-checking some of the president’s statements, including who would benefit from a minimum wage increase:

Who benefits from minimum wage boost?

Obama: “I will issue an executive order requiring federal contractors to pay their federally funded employees a fair wage of at least $10.10 an hour — because if you cook our troops’ meals or wash their dishes, you should not have to live in poverty.”

Obama’s move-part of his challenge to Congress to boost the minimum wage for most workers to $10.10 — clearly fits with his drive to act where he can and press lawmakers to do more. But his ability to act unilaterally on this point is very limited as most employees of federal contractors make well over $10 an hour.

White House officials say a few hundred thousand employees could get a wage boost from the president’s action. But it would apply only to future contracts, so would likely take several years to have even that impact.

Across the U.S., according to the Labor Department, 3.6 million workers currently make minimum wage or below. And millions who make a little more would get a boost if the wage went up to $10.10 — though some might lose their jobs or hours if employers respond to the higher wage costs by trying to use less labor.

I’m looking for coverage in the next few days about this topic. Will business leaders respond by raising wages and hiring fewer people, which would seem to widen the gap between the haves and the have nots even further. The analysis of this and how it will fit into an overall agenda of economic recovery will be an interesting one.

Catherine Rampell

Econ reporter Rampell leaving NY Times for WaPo

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New York Times business editor Dean Murphy sent out the following staff announcement on Tuesday afternoon:

We are sorry to announce that Catherine Rampell is leaving The Times to become an op-ed columnist at the Washington Post.

Catherine has been a member of our economics team since 2008, when she joined us from The Chronicle of Higher Education as our online economics editor and chief blogger for Economix. Later, she became a member of New York-based economics reporting team, along with Nelson Schwartz and Shaila Dewan, and has covered a wide range of topics. She played an on-camera role in an early experiment with daily business video, and has also written guest economics columns for The Magazine and Sunday Business (and more than the occasional theater review for Culture).

Catherine has been a generous colleague to many of us on BizDay, always willing to share her expertise and insights. We’ll miss her. We wish her well in her new job, and her new career direction.

Rampell is a Princeton University graduate.

Neil King

WSJ names King global economics editor

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Wall Street Journal managing editor Gerard Baker sent out the following staff promotion on Tuesday:

I’m delighted to announce that Neil King has been named our new Global Economics Editor and a deputy Washington bureau chief, an important first step in a significant expansion of our already peerless economics coverage.

Economics is front and center of The Wall Street Journal’s broad and growing ambit and Neil is perfectly equipped to lead our coverage.  In 21 years at the Journal, he has covered with depth and distinction a wide array of stories, from the opening up of Eastern Europe, the aftermath of the Yugoslav war, EU expansion and the birth of the euro, to international trade, OPEC and oil, the 2009 U.S. auto bailout and most recently, U.S. politics. Time and again, he has shown the ability to explain complicated matters of policy, but also to connect them to events and people far outside the bubbles that surround the world’s capitals.

Both skills will be crucial for Neil as we work to further the reach and impact of our coverage. In this new role, Neil will have oversight of all economic coverage areas, from economic policy to U.S. economics reporting, and the new central banks vertical run by Nell Henderson, allowing us to better coordinate the many strands of our reporting. In the coming weeks, we expect to appoint several new reporters and editors to round out the team and to share plans to elevate the already excellent Real Time Economics into a more vital, must-read site for all economic news, analysis and data. An enhanced digital presence for economics will be one of the pillars of my push to deepen our digital presence this year.

A fourth-generation Coloradan, Neil earned a philosophy degree from Columbia University and a master’s in journalism from Northwestern University. His resume includes stints as a coin and precious-metals dealer, a waiter, a Wyoming ranch hand, a runner on the now-defunct Pacific Stock Exchange, an Alaskan fish-boat cleaner, a grape harvester at Chateau D’Yquem, an Oakland private investigator and a New York City cab driver. His first desk in journalism—in a strip mall at the rough and tumble New Port Richey bureau of the Tampa Tribune—was approximately six feet from that of another cub reporter, Rebecca Blumenstein.

Neil will report to Jerry Seib, and work closely with U.S. editor Jennifer Forsyth.  In this newly created role, he will also work alongside fellow deputy bureau chief in Washington, the inestimable Matthew Rose.

This change also will allow us to realign our editing structure to prepare for the important coming launch of an expanded Washington online product. Susan Benkelman, who recently joined us from her previous position as Editorial Director of CQ-Roll Call, will take over management of coverage of Congress and a group of associated policy beats. That will free political editor Aaron Zitner to focus on our expanding national political coverage and the White House as we move into the 2014 and 2016 election cycles.

Tim Aeppel, who has done a splendid job shepherding the New York economics group, will take on a new assignment that we will announce shortly.

Please join me in congratulating Neil in this important new role.

 

Bernanke

Taking a look at Bernanke’s legacy

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With the nearing departure of Federal Reserve Board Chairman Ben Bernanke, many journalists are taking a look at his tenure, which saw its fair share of market turmoil and unprecedented actions.

Writing for the Los Angeles Times, Don Lee called his legacy “bittersweet”:

As Ben S. Bernanke walks away from the Federal Reserve‘s marble headquarters on the Mall after presiding over his last policy meeting Wednesday, he will leave behind a bittersweet legacy.

On one hand, his unprecedented efforts to drive down interest rates and stimulate the economy are widely credited by his peers with saving the nation from a second Depression, strengthening the economic recovery and leaving the nation’s financial condition poised to take off this year.

Yet those same policies have added momentum to one of the greatest surges in economic inequality in U.S. history, helping the wealthiest Americans add to their enormous riches while the incomes of almost everyone else stagnated.

By driving interest rates down to historic lows, the Fed chairman helped fuel a huge surge in the stock market, where the wealthiest 1% of Americans have been far better positioned to take advantage of gains than their less affluent fellow citizens.

The Wall Street Journal’s E.S. Browning wrote a commentary saying even some of Bernanke’s detractors have been won over by his management:

But many professional investors are acknowledging, sometimes grudgingly, that Mr. Bernanke has gone a long way toward achieving the main goal he set in 2008: He has stabilized markets and restored a large measure of investor and public confidence. Many thought it impossible that he would accomplish what he did.

“Back then during the real trauma in the fourth quarter of 2008 and first quarter of 2009, people were trading on fear. Now it is a much more normalized trading pattern. There is certainly still some fear out there and there are questions about valuation, but it is much more normalized,” says Andy Brooks, another market veteran. He heads stock trading at Baltimore asset-management firm T. Rowe Price, which oversees about $650 billion.

In a 2008 speech to the Economic Club of New York, Mr. Bernanke described his goal this way: “As in all past crises, at the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets. The crisis will end when comprehensive responses by political and financial leaders restore that trust, bringing investors back into the market…”

The strides since then are remarkable. The Dow Jones Industrial Average has more than doubled from its 2009 low. The Nasdaq Composite Index has tripled. With new worries spreading about China and other developing markets amid fears that U.S. stocks are overdue for a pullback, the Dow suffered its worst weekly decline last week since 2011.

And yet many investors hesitate to sell, for fear of missing future gains. That is a huge change from just a few years ago, when they were afraid to buy. Despite last week’s angst, the Dow is just 4% below the record it set on Dec. 31.

The Augusta Chronicle business editor Tim Rausch reported that Bernanke does have some detractors:

One of Bernanke’s former colleagues is not so gushing. Allen Berger was a senior economist at the Federal Reserve until 2008, when he became a professor at the University of South Carolina.

Berger said Bernanke was a good chairman, but dismisses the hype surrounding his saving of the world’s financial system.

“During the financial crisis, he did not give a public appearance of confidence. He told the public the banks were failing. And he backed the TARP program and other bailouts,” Berger said. “He ended up bailing out shareholders when I would have preferred an orderly liquidation like the FDIC does now.”

Bailouts encourage shareholders to take excessive risks, Berger argued.

Bernanke is often seen as a knight in shining armor. “So far, he’s doing well with it, but we’ll see how history treats him down the road,” said Jean Helwege, another member of the finance faculty at USC who also worked in the Federal Reserve System. “He has a decent amount of integrity and tries very hard to do a good job, but I also think there’s an element of him patting himself on the back and his buddies patting him on the back.”

Helwege said that Bernanke was chairman before the crisis and didn’t do anything when it became apparent that the housing market was dragging down the economy and lenders were going bankrupt.

While historians will sort through Bernanke’s legacy in the coming years, he won’t be around to preside over one of the biggest unknowns – what will happen as the Federal Reserve pairs back its bond-buying program. The economic stimulus was definitely needed and Bernanke deservedly get much of the credit for pulling the U.S. economy out of a recession. But how investors will react to the easing and new leadership will likely have a lasting effect on how Bernanke’s story is written in the history books.

Ezra Klein 2

Klein to start new venture with Vox Media

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Ezra Klein, who wrote about economics for The Washington Post, is starting a new online publication with Vox Media.

Klein writes, “Today, we are better than ever at telling people what’s happening, but not nearly good enough at giving them the crucial contextual information necessary to understand what’s happened. We treat the emphasis on the newness of information as an important virtue rather than a painful compromise.

“The news business, however, is just a subset of the informing-our-audience business  —  and that’s the business we aim to be in. Our mission is to create a site that’s as good at explaining the world as it is at reporting on it.

“Reimagining the way we explain the news means reinventing newsroom technology. Vox is already home to modern media brands —  SB Nation, The Verge, Eater, Curbed, Racked, and Polygon — that are loved by tens of millions of people, including us. The engine of those sites is a world-class technology platform, Chorus, that blows apart many of the old limitations. And behind Chorus is a world-class design and engineering team that is already helping us rethink the way we power newsrooms and present information.

“We’ll be joined by some familiar faces in this venture, including the great Dylan Matthews — and more who’ll be announced in the coming weeks and months. But we’re also hiring. If you share our passion for fixing the news, you should send us your resume here, and tell us how you want to help us do a better job informing our readers.”

Read more here.

Reuters

Reuters seeks Fed reporter in DC

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Reuters is seeking a journalist who is a proven news breaker and deeply sourced professional to cover the U.S. Federal Reserve Board from Washington.

We need someone with a hefty record in delivering ahead-of-the-curve initiative reporting and agenda-setting stories, who is comfortable handling breaking news, and whose prose stands out for its clarity.

The Fed is one of Washington’s most cloistered institutions, so the winning candidate will need excellent source-building skills. Moreover, this reporter must be capable of generating smart and incisive copy that takes readers beyond the bank’s clutch of annual public events to paint the big picture about the future policy track for the world’s most important central bank.

The Fed is at a critical juncture. It about to welcome a new chair and vice chair just as the Fed is preparing to wind down the greatest monetary policy experiment of all time. A mountain of unanswered questions on the direction of U.S. monetary policy, the U.S. and global economies and world financial markets will emerge in the wake of this high-stakes act.

Qualifications

We need someone who is able to come to terms with the beat quickly and who can help drive the file on what is one of the most important stories for our diverse readership.

We also need a team player who can work hand in glove with the rest of our Fed coverage team. The reporter who wins this post needs to have a grounding in both economics and finance and a strong sense for how Fed policy interacts with financial markets.

Even more so, however, this person needs a hard nose for news and the skills required to tell a big story well.

To apply, go here.

WP Wonkblog-01

Ezra Klein leaving Washington Post

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Greg Schneider, national economy and business editor at The Washington Post, sent out the following announcement to the staff on Tuesday:

We regret to announce that Ezra Klein, Melissa Bell and Dylan Matthews are leaving The Post for a new venture.

All three were instrumental in two of The Post’s most successful digital initiatives, Wonkblog and Know More. We plan to continue building those brands and expanding their reach, and we’ll have some exciting announcements related to them in the coming days.

When Ezra joined us in 2009, he was a wunderkind blogger with brash confidence and a burning desire to write a column in the print newspaper. As he leaves us, Ezra is still a brash wunderkind, but now his burning desire has a grander scope: He is looking to start his own news organization, an ambition that befits someone with uncommon gifts of perception and analysis. Ezra’s passion and drive will be missed, but we will take pride in watching him chart out his new venture.

Melissa has played a pivotal role in our digital strategy. As director of platforms, Melissa worked with the embedded developers to introduce WordPress as a secondary CMS, allowing for much of the development experimentation we’ve seen over the last year. She took over blog strategy and worked to hone the number of blogs and strengthen existing brands. She also managed to find time for some writing while here, driving our live coverage expansion, penning a Style column for more than a year, blogging for BlogPost and Style Blog and writing magazine stories. But her biggest strength is her personality, a combination of relentless determination and self-deprecating humor that helped her motivate young developers.

Dylan Matthews is a wunderkind in his own right. A blogger since middle school, Dylan had freelanced for Slate and worked at the American Prospect — before his 18th birthday. He started contributing to Wonkblog while still a student at Harvard and jumped in full-time in 2012. Last year he launched Know More, which was an instant hit. We will miss his humor and sharp instincts for what works on the Web.

Please join us in wishing Ezra, Melissa and Dylan the best and thanking them for their many contributions to The Post.

Money

Consumer spending climbs in December

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The economy got yet another mixed signal Tuesday with consumer spending in December climbing slightly. With last week’s job reporting coming in lower than analysts expected, this could be another way to confuse investors.

Writing for the Wall Street Journal, Jeffrey Sparshott and Paul Ziobro had this story:

Americans kept shopping at a steady pace as the holiday season wrapped up, suggesting the U.S. economy was on firm footing heading into this year.

Retail sales gained 0.2% in December and jumped 0.7% excluding auto sales, the Commerce Department said.

Though overall sales in prior months were revised modestly lower, they indicated a pickup in demand from consumers during the fourth quarter alongside other signs of a strengthening economy.

The final stretch of the year “was a pretty solid quarter for consumers,” said Julia Coronado, chief economist at BNP Paribas. “That certainly puts us on decent footing going into 2014.”

Consumer spending, which accounts for more than two-thirds of economic output, is expected to show a big contribution to U.S. growth in the final months of 2013. Economists now expect growth at or above a 3% annualized pace in the fourth quarter after registering a strong 4.1% rate in the third quarter.

U.S. households were resilient throughout much of last year despite higher payroll taxes, which sapped spending power, and Washington gridlock, which jolted confidence. Many Americans have been buoyed by rising prices for homes and a strong stock market. Debt burdens are down, leaving more disposable income and raising expectations for solid growth in consumer spending this year.

The Reuters story by Lucia Mutikani explained the disappointing job numbers and quoted analysts as saying the economy was heading in the right direction:

While a report on Friday showed job growth stumbled in December, that was largely dismissed as being due to cold weather, and economists said a wealth of other data suggest the economy is gaining strength.

“Weather aside, if we’re right in thinking that the underlying trend in jobs growth is still improving, households will continue to spend more freely in 2014,” said Paul Dales, senior U.S. economist at Capital Economics in London.

“This report supports our view that a 4 percent annualized rise in real consumption will help to generate a decent 3.0 percent gain in overall GDP in the fourth quarter,” he added.

The government report suggested holiday sales were better than some had expected, though at the cost of heavy discounting by shopkeepers. The National Retail Federation said a measure of holiday sales, which leaves out spending on cars, gasoline and restaurant meals, rose 3.8 percent in the November-December period from a year earlier, up from the 3.5 percent rise in 2012.

Bloomberg’s Michelle Jamrisko reported that other economic indicators showed that inflation was unchanged and the threat from the U.K. also eased:

Stocks rose, giving the Standard & Poor’s 500 Index its biggest gain of the year, after the retail sales report. The S&P 500 added 1.1 percent to 1,838.88 at the close in New York. The S&P Supercomposite Retailing Index rose 0.7 percent.

Another report today showed the costs of goods bought from abroad were unchanged in December, indicating little inflation pressure from overseas. The reading for the import-price index followed a 0.9 percent drop in November, according to figures from the Labor Department. Excluding fuel, prices fell 0.1 percent, the first decline since August.

Inflationary pressures also abated in the U.K., where consumer prices rose 2 percent in December from a year earlier, cooling to match the Bank of England’s target for the first time in more than four years, data from the Office for National Statistics showed today in London.

The U.S. retail sales report showed seven of 13 major merchant categories realized gains last month. The increases were paced by a 2 percent jump at grocery and beverage stores that was the biggest since October 2006.

The headline on Jayne O’Donnell’s story for USA Today said the holiday numbers presented a “mixed picture”:

But there’s disagreement over how positive the news is for retailers. Ken Perkins, president of stock analysis company Retail Metrics, says the season delivered “holiday coal in most retailers’ stockings.”

Of 29 retailers that have recently issued earnings guidance for their current quarter, which includes the holiday period, Perkins said 25 of them were negative. He attributes retailers’ problems to a shorter holiday shopping season, deeper discounts and a lack of must-have items.

The government’s results for December included the increasingly busy Monday after Thanksgiving, known as Cyber Monday, which fell on Dec. 2 this year. Most retailers feature deep online discounts that day.

The Commerce Department also lowered its estimated sales increase for November to 0.4% from 0.7%. October’s increase was cut to 0.5%, down a tenth of a percentage point.

The markets liked the news, which makes it a small victory for those betting on the economy’s continued recovery. While it’s only one month’s worth of data, it’s a good start to the year.

Reuters-Logo

Reuters seeks economy reporter in DC

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Reuters is seeking a correspondent to write detailed, accurate and insightful stories on the US economy and economic policy, with an understanding of what data and policies mean for financial markets and US monetary policy.

Evaluate news leads and tips in order to develop compelling story ideas. Interview prominent economists at financial and academic institutions to create stories that meet company’s editorial style and standards.

The stories must convey useful information to subject area experts and financial market participants. Assess economic data to determine its newsworthiness and write accurate, insightful stories based on the data, often under tight time and competitive pressures.

Periodically cover the International Monetary Fund, the World Bank, US Treasury and Federal Reserve and review the data they produce in order to provide accurate analyses for consumers.

Qualifications

Bachelor’s degree in Economics, Journalism, Communications or a related field plus 5 years of progressive experience as a journalist with a major international news agency. Experience reporting on the economy of a G-20 member nation, including fiscal and monetary policy, inflation, gross domestic product, trade, retail sales, manufacturing and labor statistics. Experience reporting on industrial companies including company results and share prices and conducting interviews with high-level company executives. Experience reporting on stock exchanges, treasuries and foreign exchange markets.

To apply, go here.

Christmas retail sales

Assessing holiday sales

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It’s now time for retailers to report exactly how good (or bad) the holiday shopping season was last year. While the importance is well reported, the numbers usually are a harbinger for consumer sentiment and coming spending levels.

Anna Prior wrote for the Wall Street Journal that many stores had a tough season, with big-box store Costco as a lone standout:

Heavy discounting and slow traffic weighed on retailers’ December sales results, but Costco Wholesale Corp. COST +3.91% was among the few that bucked the trend.

The wholesale club reported sales at stores open at least a year rose 5% for the month, topping expectations for a 2.6% increase. Among the stronger performing categories were garden, automotive, apparel, small appliances and home furnishings. The consumer electronics category posted improvement from recent months, but the metric still declined slightly.

A number of retailers have offered disappointing holiday updates in recent days, suggesting the critical holiday period was marked by heavy promotions, especially for apparel and consumer electronics.

Although sales and store traffic appeared to pick up at the beginning of the Thanksgiving holiday weekend, shoppers took a break and didn’t start buying in earnest again until the week before Christmas.

At the same time, online sales were stronger than expected, but Ken Perkins of Retail Metrics said shopping on the web likely didn’t expand the overall spending pie so much as shift how and where that money was spent.

Driven largely by Costco, the eight retailers tracked by Thomson Reuters that have reported so far recorded a 2.7% increase in December same-store sales, or sales at stores open at least a year. Gap Inc. GPS +0.56% is scheduled to report after the market closes. Thomson Reuters projects the nine companies to post 1.9% growth, compared with a 7.2% increase a year earlier.

The New York Times reporter Julie Bosman wrote a story about Barnes & Noble’s lackluster year:

Barnes & Noble, the nation’s last remaining major bookstore chain, experienced steep sales declines in its digital division during the nine-week holiday period, the company announced on Thursday.

Revenue in the Nook division, which includes digital content and devices, was $125 million, a 60 percent drop compared with the period a year earlier.

Sales in its brick-and-mortar bookstores were less grim, with a 6.6 percent decrease from the previous year, to $1.1 billion.

The numbers reflect Barnes & Noble’s decreasing digital ambitions, as it declined to release a new color tablet in 2013. The bookseller has said it will pull back from trying to compete in the crowded tablet market against big companies like Amazon and Apple.

The release of the sales data came one day after Barnes & Noble announced that it had filled the long-vacant post of chief executive with a company insider, Michael P. Huseby, previously the president of Barnes & Noble and chief executive of Nook Media.

ReutersPhil Wahba reported that many retailers were beginning to cut earnings forecasts after discounts cut into their holiday numbers:

Many large U.S. retailers slashed their earnings forecasts on Thursday because of steep discounts they offered during the holidays to persuade reluctant consumers.

The discounts boosted overall industry sales but hurt profits at many chains, including L Brands Inc, Family Dollar Stores Inc and teen retailer Zumiez Inc. Even retailers that reported big sales gains, like Kay Jewelers parent Signet Jewelers Ltd, were not spared.

Fewer store visits and aggressive pricing at the start of the season by big retailers like Amazon.com Inc and Wal-Mart Stores Inc left many chains with little choice but to offer sweeter deals. Many also had too much holiday merchandise, which was ordered in late spring when retail executives were feeling upbeat.

“The discounts needed to be deeper, and they needed to be longer,” said Joel Bines, managing director of consulting firm AlixPartners.

The discounts did result in a stronger-than-expected 2.7 percent increase in December sales at the eight retailers tracked by the Thomson Reuters Same-Store Sales Index.

Still, L Brands cut its holiday-quarter profit forecast on disappointing December sales at its Victoria Secret and La Senza chains.

While L Brands’ sales at stores open at least year rose 2 percent last month, Wall Street had been expecting a gain of 3.7 percent, according to Thomson Reuters I/B/E/S. The company’s shares fell more than 4 percent.

Bloomberg’s Nick Taborek reported that retail stocks slid across the board on the news, indicating that investors are leery of what’s coming for many stores:

Retailers retreated 0.2 percent as a group. Companies from L Brands, which owns the Victoria’s Secret and Bath & Body Works brands, to discount chain Family Dollar (FDO) cut profit forecasts, showing the price war that marked the holiday season is taking a toll.

Family Dollar slid 2.1 percent to $64.97 and L Brands lost 4.1 percent to $57.75. The companies cut profit forecasts after reporting disappointing December sales as promotions that failed to lure shoppers hurt margins.

Bed Bath & Beyond slumped 12 percent to $69.75. The retailer projected fourth-quarter earnings of $1.60 to $1.67 a share, less than the $1.79 that analysts had estimated. Home-goods merchant Pier 1 Imports Inc. tumbled 12 percent to $20.44 as it also lowered its quarterly forecast.

While the Federal Reserve Board watches for more signs of growth in order to continue pulling back from its bond-buying program, signs that the economic recovery will continue are mixed. It doesn’t bode well if the backbone of the economy is cutting earnings forecasts and bracing for steeper discounts.