Retail sales in the U.S. dropped for the fourth consecutive month in October, down 2.8 percent overall, the biggest monthly decline since record keeping began in 1992. This exceeded the previous record set in November of 2001, just after the terrorist attacks.The decline was paced by a 5.5 percent plunge in auto sales, following last month's 4.8 percent drop, however, declines were widespread with purchases excluding automobiles down 2.2 percent, also a record.
As shown below, auto sales are now down a whopping 22.2 percent from year ago levels with little hope of a significant rebound in the months ahead.
Nearly every sales category declined in October - furniture sales were down 2.5 percent, electronics sales fell 2.3 percent, and sporting goods sales fell 1.6 percent - however, gasoline station sales dropped more than any other, down 12. 7 percent for the month, bringing the year-over-year increase to just 0.4 percent.Note that earlier in the year, when prices at the pump were rising, gasoline station sales had increased tremendously, lending support to the overall retail sales figures as other categories declined.
Since gasoline prices have plunged, these sales are now detracting from the headline number and should have an even bigger impact in the November report.
Some argue that excluding automobile and gasoline station sales paints a less dour picture of retail sales - down just 0.5 percent in October versus the headline 2.8 percent decline - however, this really is wishful thinking.With the exception of food and health care, retail sales have slowed markedly over the last year, down about four percent in inflation adjusted terms even when excluding auto sales.
The tightening of credit and the pull-back in spending on discretionary items will continue to impact retailers for months to come.
Not to worry, folks, Say's Law will save us!
ReplyDeleteAs you may recall, Say's Law is supposed by some commenters on this blog to say that "Supply creates its own demand."
That being the case, the current slow down in consumption can easily be fixed by simply having US industry ramp UP production.
What, you don't think that's likely to happen? Why not? Don't CEOs know about Say's Law? They really need to learn more about the dismal science, I guess.
Its about time us Americanos slowed down on the spending a little bit. We should all be saving much more and spending much less. Thats not very good for the economy, but that needs to change too. Nice blog, Tim. Excellent charts.
ReplyDeleteTim...e-mailed you a comment regarding today's chart to tliacono@yahoo.com
ReplyDeleteBailout 2008, a poem by David Jeffrey
ReplyDeleteLike a bloodied warrior,
laying broken and torn.
Like a dying soldier, hopeless and forlorn.
But the blood, it be green,
the color of money.
And the soldier is an economy,
and it is anything but funny.
Broken are it's people and shattered are their dreams.
Thanks to the ultra rich and their full proof schemes.
It is a tragedy with more pain to come.
Finance will be Hell, and their wills will be done.