Consumer: "I'm still not dead yet"

Retail sales rose sharply in September, up 0.6 percent overall and 0.4 percent excluding motor vehicles, proving once again that the U.S. consumer is not dead yet. On a year-over-year basis, overall sales rose 5.0 percent, slightly higher at 5.1 percent without auto sales.
Both the the monthly increase and the year-over-year gains were influenced greatly by rising gasoline prices. Sales at gasoline stations rose 2.0 percent in September and, if these sales are removed, demand at all other retailers increased by only 0.4 percent.

On a year-over-year basis, gasoline station purchases rose a whopping 9.6 percent following the plunge in energy prices that began in August of 2006. Also from year-ago levels, food and beverage sales jumped 6.9 percent and health care spending rose 6.5 percent, all of this providing a good indication as to where an increasing amount of sales now occur - energy, food, and health care.

It is important to note that these figures are not adjusted for inflation - given rising prices (that do not necessarily show up in the consumer price index), higher retails sales do not necessarily indicate higher sales volume.

Other categories showing increases during September were auto sales (up 1.2 percent), health care (up 1.0 percent), and electronics (up 0.9 percent). Declines were seen in sporting goods (down 0.7 percent) and home furnishings (down 0.6 percent) which are now clearly hurting due to the housing slump as shown below.
Sales of building materials, garden equipment, and related supplies rebounded modestly (up 0.1 percent), however, they too show the impact from declining real estate activity.
The impact of personal spending on third quarter GDP is anxiously awaited. Accounting for over 70 percent of economic activity, consumption is the key ingredient for continuing economic growth in the U.S. - the first look at third quarter real GDP will be released at the end of the month.