Retail Sales Rise on Gasoline Prices
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Real Retail sales dropped in March, driven lower primarily by durable goods and automobiles.
Nominal sales -- non-inflation adjusted retail sales -- surprised to the upside. The 0.2% gains were due mostly to increases in essentials -- food, gasoline, and heating oil. Sales at Gasoline store were up 1.1 %, while food & beverage stores up 0.4%; nonstore retailers (home heating oil) was also strong. Outside of these basics, Consumer spending was less strong. Declines were in building materials (down 1.6%), and general merchandise (down 0.6%).
On a year-on-year basis, March Retail sales softened to +2.0% from +2.9% last month.
Bottom line: What little strength we saw last month was narrowly based, and due due to higher prices. In real terms, sales were negative. The impact of Retail Sales on Q1 GDP will be to pull it down further.
chart courtesy of Barron's Econoday
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Sources:
ADVANCE MONTHLY SALES FOR RETAIL TRADE AND FOOD SERVICES FOR MARCH 2008
MONDAY, APRIL 14, 2008, AT 8:30 A.M. EDT
http://www.census.gov/marts/www/retail.html
ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES 4.14.08 .pdf
April 14 Release
http://www.census.gov/marts/www/marts_current.pdf
Related:
U.S. Retail Sales Rise on Gain in Gasoline Purchases
Bob Willis
Bloomberg, April 14 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGV74CnL6F7Y&
Monday, April 14, 2008 | 10:13 AM | Permalink
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Comments
Consumers are slow to adjust, but they will. By and large, the house ATM is shutting down, but the credit cards still work-that will change. Two years ago it was hard to get denied a card and good credit got you a 30k limit. Now, you get a 10k limit. Many people continue to spend beyond their means-denial is powerful-but reality always wins in the end.
Retail sales will continue to fall, probably at an accelerating rate.
Posted by: Rich Shinnick | Apr 14, 2008 11:13:17 AM
This is the slowest train wreck ever.
Posted by: johnnyvee@yahoo.com | Apr 14, 2008 11:24:01 AM
I think these nominal numbers will help place some well needed nails into the coffin of commercial real estate. The expansion of strip malls and walmarts, home depos, and endless mindless shopping outlets is as bogus as the synthetic debt which created this growing mess!
Inflation will impact shipping costs across the board and thus expansion of more inefficient outlets would be suicidal for developers and retailers, thus inventories will be consolidated into fewer outlets as consumers consume less. In this declining growth environment, sales will edge up in proportion to inflation and any gains will be offset by lower profit margins. Cash will be king and business will grind down and bottom in two years and then rebound very slowly. In 2010, I hope the vast amount of commercial developers are broke!
Posted by: DH@TH | Apr 14, 2008 11:54:10 AM
From my little corner of the world I've watched in amazement over the last few years as retail expanded greatly.
In a small mid-western town of about 10,000 people in the last two-three years I've seen numerous drug stores and numerous auto parts dealers come in. During a time when most good paying jobs were leaving, and the jobs that were coming in were being paid less than half as much as the old jobs. As far as I could see there was no way this number of retail outlets in a small shrinking town was going to make it. Will be interesting to see how it works out.
Posted by: farmera1 | Apr 14, 2008 12:05:44 PM
Couldn't agree more re: the unsustainable rate of commercial development in our area. We're in an old rust belt/rural region that is growing due to expansion of a local military base (think that might change as Fed tax receipts fall?). 5 new strip malls, each only 20 to 30% occupied and "anchored" by cell phone stores. I'm betting this will be a ghost town in 5 yrs.
Posted by: Brian | Apr 14, 2008 12:17:59 PM
Re: "Bottom line: What little strength we saw last month was narrowly based, and due due to higher prices. In real terms, sales were negative. The impact of Retail Sales on Q1 GDP will be to pull it down further."
>> BONY's mike Woolfolk notes that "while the US economy may have entered recession in Q1, the US consumer remains resilient in the face of rising energy costs and impending layoffs long as they have access to credit...While we anticipate a temporary surge in consumer spending this summer on tax rebate checks, decade lows in confidence is likely to prompt consumer to pay down debt rather than step up discretionary spending"
Posted by: DH@TH | Apr 14, 2008 12:25:38 PM
Same thing here in Charlotte, NC. Lots of commercial build-out since the early 2000's. Every little community has its own Lowes, HD, McD's & Walmart along with the pizza chains and various eating establishments.
At least you aren't burning as much gas now that they are all practically in your backyard.
Posted by: BG | Apr 14, 2008 12:35:28 PM
I live in NYC, and I do not see any perceptible changes. The restaurants are all booked, cinema theaters are overflowing, starbucks are jam packed, 1 BR in midtown still cost close to a million. Barring a couple of homeless people in the subway, no signs of recession here. Now this all may change in next 3-6 months as the wall street/Financial institution job losses come in effect. Stock market is barely 10% down from the pick. So the market thinks that things will be back on track soon.
Posted by: Bharat123 | Apr 14, 2008 3:47:14 PM
Great news Barry, good to see some solid
gains with the gasoline sales... atleast
the crack spread is improving, helping out
my energy stocks.
Posted by: rickrude | Apr 14, 2008 4:51:11 PM
Retail sales rise better than expected was all the rage today with Dennis the Menace. He failed to mention that the gain was due to increases(inflation)in energy costs.
Posted by: Pat G. | Apr 14, 2008 7:10:19 PM
