Retail Sales Ask: "What Soft Landing?"
Let's take a quick look at the Retail Sales data, and put to rest some amusing theories about the resilience of the consumer.
The spin has been all positive since the data came out. Expectations were for a rise of 0.3%, according to a Dow Jones survey, based upon the huge drop in gasoline prices. Earlier in the week, I heard a talking head on CNBC opine he would be surprised if Sales didn't exceed that, given all the newfound cash in consumers pockets thanks to energy savings.
Surprise! Retail Sales decreased by 0.4%, according to the Commerce Department (seasonally adjusted data). August sales were revised down to a 0.1% increase from a 0.2% increase.
Now for the fun part: Retail Sales can get reported in a variety of "EXes;" Ex-Auto, and Ex-Gasoline are tow more common versions. Ex-Gas retailers, and sales were up 0.6%; Ex-autos, and sales were down 0.5%. Excluding both autos and gasoline, all other retail sales increased 0.8% in September.
What can we learn from this? Quite simply, despite the huge drop in gasoline prices, total sales were still off nearly half a percentage point in September. (I'll mercifully spare you of any further zero sum discussion).
One might have thought that, given all of the dollar savings at the pump, at least an equivalent amount of dollars would have been plowed back into the economy. Indeed, the new found energy savings could have led to a wealth effect, leading to more big ticket items -- including cars.
Nope. But taking a page from the school of inflation ex-inflation, if we remove the items that went down in sales, we can reach the conclusion that sales were not punk.
UPDATE: October 14, 2006 7:58am
Funny, if you go abroad, the view from afar of U.S. Retail Sales is far less enthusiastic than that of the local cheerleaders:
US: September retail sales unexpectedly down (-0.4%)
BNP Paribas, Caroline Newhouse-Cohen, Oct 13, 2006
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Tracked on Oct 13, 2006 12:59:35 PM
I actually disagree with you on this one. Looking at the data without gas and autos gives you an idea of what else is going on in the world. The Gasoline decline was so steep that it skews the numbers and doesnt paint an adequate picture of what happened. Ex'ing out the gas number, in this case, is the prudent thing to do.
Posted by: DG | Oct 13, 2006 10:42:56 AM
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