Week In Review
Retail sales rose 0.6% in March. Sales excluding gasoline and automobiles rose 0.3% while control group sales rose 0.4%. The control group excludes food, gasoline, automobiles and building materials, and is used in calculating GDP.
Sales in March were solid yet unspectacular. Considering that retail sales growth was negative in each of the previous three months, the March report was not enough to prevent the first quarter to be a disappointment from a consumer standpoint. This will likely hold down Q1 GDP. The consumer is expected to be more active in Q2, yet this is far from certain.
S&P Global Ratings cut Connecticut’s general obligation rating from A+ to A. S&P cited the state’s bailout of Hartford along with pension concerns and the potential need for additional infrastructure borrowing. In addition, S&P raised Hartford’s general obligation rating from CCC to A following the bailout package announcement.
Hartford was on the brink of bankruptcy. The Democratic Governor and Connecticut lawmakers moved forward with a long-term bailout package that calls for the state to cover the city’s debt payments. S&P’s downgrade of Connecticut’s general obligation debt and upgrade of Hartford should not come as a surprise as the state’s debt burden increased and Hartford’s debt burden decreased as a result of the bailout.