``Fall arrivals!'' the newspaper ads are beginning to proclaim. ``Back-to-school!'' ``Autumn fashions!'' ``Get ready for winter!'' Although most of us may still be thinking Bermuda shorts and sandals, winter coats and sweaters are appearing in the stores. Can Christmas gifts be far behind?
The mood in the serried aisles of the great American marketplace -- from the malls to the discount houses, from trendy boutiques to the 5-and-dimes -- mirrors the economic scene in many ways.
The overall United States economy, of course, has experienced a slow first half. But there are indications that both retail sales and the larger economy will accelerate over the balance of '85.
For the nation's big retailers, 1985 so far has been a rather disappointing year -- but only when compared with the red-hot selling of last year and the year before. Looking ahead to the fall and winter sales season, most merchants and retail-sales analysts are encouraged. And thinner inventories and better cost controls make analysts optimistic about the performance of retail-store stocks.
It's important, too, to note that for the past six months, retail sales have not really been bad -- just not as good as the year before.
Last week, J. C. Penney, Sears, Roebuck, and Montgomery Ward reported declines for July. Others such as Federated Department Stores, Carter Hawley Hale, and R. H. Macy fared better -- although adjusted for new-store openings and acquisitions (a costly way of boosting sales), the performance was not particularly remarkable.
As an economic litmus, the July sales report appeared to sour Wall Street, which was having a rocky enough time due worries about interest rates being pushed up by heavy government borrowing.
The Dow Jones industrial average finished Friday at 1,3xx.xx, down xx.xx points for the week.
That retailing report reflects on past economic conditions, however.
Moreover, merchandising has actually been ``fairly decent,'' despite the falloff from the high levels of a year ago, says economist David A. Wyss, senior vice-president with the Data Resources Inc. consulting firm.
Chain store sales rose 9.8 percent in July, he points out. ``That's softer, but it's not a bad number at all.''
When automotive sales are factored out, Mr. Wyss says, there has still been a respectable 6 percent annual rise in consumer sales.
Consumer confidence has slipped somewhat, ``but it is still strong by historical standards.'' And even auto sales are better than they were three years ago, he observes.
Consumers, however, have been spending ahead of their income, and this should slow down in the future.
A more sober view of consumer spending in '85 has prompted most big retailers to cut back on inventories and bring costs under control, analysts say. This should help their financial performance, regardless of the level of sales.
``In the second half, most companies will have tighter inventories,'' says Thomas Tashjian, who follows the retail trade for Prudential-Bache Securities. ``This is very much in line with sales gains.''
Mr. Tashjian says American consumers have been in a ``maintenance-spending mode'' the past few months.
There have not been the big booms in spending that were occurring last year or the year before. But he expects a bit more buying as the fall fashion season begins.
Tashjian has detected a shift of interest by consumers toward what he calls the ``upscale discounting'' outlets (K mart, Venture), concluding that this represents a desire to get a good price but to shop in relative comfort. Consequently, upscale and up-price chain stores will ``have a tough time for the next few months,'' he says.
There will be continued consolidation in this end of the retail industry, he says, since ``moderate sales gains will shake people out.''
At Shearson Lehman Brothers, retail specialist Stacy Ruchlamer makes a distinction between companies that handle hard goods and those that trade in soft goods.
Hard goods (durables) benefited from ``pent-up demand'' during the recession, and sales boomed in 1983 and '84, she says.
But once those goods (refrigerators, televisions, furniture, lawn mowers, etc.) are purchased, the need is satisfied for several years. Hence the sales of producers that specialize in hard-goods are leveling off.
Soft goods (clothing is the primary example), on the other hand, have done rather well, and Ms. Ruchlamer expects the last half of '85 to be very good for these stores.
If the White House tax-reform proposals become law, Ms. Ruchlamer says, the retail stores will benefit. Their tax rates would be cut; consumers, too, would have more after-tax income and thus more purchasing power.
Even without tax reform, analyst Milton Schlein of the Value Line Investment Survey says the overall retail industry is in sound condition from an investment point of view, thanks to the shakeout of inventories and enactment of cost controls.
Beyond the autumn and winter selling seasons, Mr. Schlein says, ``there should be less emphasis on physical expansion and more productivity.''
With thinner inventories, he says, retailers won't have to turn as much to discounts or sales, and that should produce a ``richer sales mix.''
DRI economist Wyss is even encouraged about durable goods, pointing out that with mortgage rates relatively low, home sales should perk up. ``That is a forerunner of better durable-goods sales,'' he says, since most new home buyers go on to furnish their new dwellings with new appliances and furniture. CHART: Interest Rates. *Yields; Source: Bank of Boston.
Percent Prime rate 9.50 Discount rate 7.50 Federal funds 7.56 3-mo. Treasury bills 7.15 6-mo. Treasury bills 7.37 7-yr. Treasury notes 10.20* 30-yr. Treasury bonds 10.62*