Tuesday, September 15, 2009
The Commerce Department reported that retail sales during the month of August rose at their fastest pace in three-and-a-half years, largely due to sharply higher automobile sales aided by the U.S. government's wildly popular "Cash for Clunkers" program.
After a downwardly revised decline of 0.2 percent in July, overall retail sales jumped 2.7 percent in August, far exceeding the consensus estimate of about 2.0 percent, confirming the huge impact that the auto purchase incentive had over the summer.
Excluding motor vehicles, retail sales rose 1.1 percent last month and, after stripping out gasoline station sales, consumers purchased just 0.6 percent more than the month before. While this is an improvement to be sure, it is part of a data series that has been hovering around zero since plunging last fall and, clearly, the temporary combination of higher auto sales and higher gasoline prices do not signal a dramatic change in the behavior of the American consumer.
Aside from automobile and gasoline sales, the clothing category saw the biggest improvement, up 2.4 percent for the month, and sporting goods sales were not far behind with a gain of 2.3 percent in August.
Furniture and building material sales continued to fall, down 1.6 percent and 1.2 percent, respectively, and serve as ongoing reminders of the impact of the burst housing bubble on consumer demand in housing-related sectors.
Obviously, the real test in the consumer sector will come next month when September retail sales are reported, a total that will not have the benefit of a multi-billion government stimulus program to spur demand. Thus far, auto dealers appear to be struggling mightily in the absence of $4,500 rebate checks being written in Washington.