Wednesday, February 13, 2008

Consumers Haven't Given Up Just Yet

Feb. 13 (Bloomberg) -- Retail sales in the U.S. unexpectedly rose in January as Americans spent more on cars, clothes and gasoline, a sign that the biggest part of the economy is holding up even as the housing slump deepens.

The Commerce Department said total sales rose 0.3% in January, compared to a 0.4% decline in December. From January 2007 to January 2008, retail sales increased by 3.9%.

Economists surveyed by expected a 0.3% drop in retail sales for the month.

Comment: The chart above (click to enlarge) shows annual retail sales growth rates, from the same month in the previous year, and averaged over six months to smooth the data. Notice that the trend over the last 9 months is upward, and it looks nothing like the downward trend in 2001-2002 during and following the last recession (shaded in graph).


At 2/13/2008 10:54 AM, Anonymous Anonymous said...

Consumers still have to buy food and other essentials too.

Retail sales skid in January "...retail sales at major chains rising just 0.5% in what was by one measure the month's worst performance in nearly 40 years..."

"...shoppers held on tight to the gift cards they received over the holidays or used them to buy milk and bread rather than toys or iPods....

Nordstrom's January sales 'clearly a disappointment' Sales at Nordstrom Inc. plummeted to $486.3 million last month compared with $610.1 million a year earlier.

Stores Post Disappointing January Sales Sales at 43 retailers surveyed by the UBS-International Council of Shopping Centers rose just 0.5 percent in January, well below the original 1.5 percent forecast.

At 2/13/2008 1:42 PM, Blogger bobble said...

is the data in that chart adjusted for inflation. you don't say, so my guess is that it is not.

therefore that chart is worse than useless.

At 2/14/2008 10:46 AM, Blogger SoldAtTheTop said...

Professor Perry,

Retail sales is reported in current dollars.

Adjusted for inflation (ticking up notable recently) your chart would look substantially more negative.

Click here for a better chart.

Also, overall retail sales includes items like clothing, food and fuel which are essentially non-discretionary.

Non-discretionary purchasing doesn't tell us much about the state of the consumer as cutting back on food and gas is much harder to achieve than say... flat panel TVs and a new sofa.

To get the best outlook on the consumer, par down the retail sales to include only the discretionary items and things look considerably worse and reflect the weakness that has been being reported by retailers.


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