Categorized | economy

So what do those bad retail numbers mean?

Nothing, really.

The media love dramatic headlines and terrifying opening sentences, so “the sharpest drop in retail sales this year,” sounds the perfect panic note. But it helps to keep that 1.5% drop in retail sales in some perspective.

Last month, retail sales increased 2.2%, of which 1.7% was solely attributable to the Cash For Clunkers program that supercharged auto sales for July and August and another .1% (slightly less) attributable to the rise in gasoline prices. All told, that meant retail sales climbed about .4%.

Cash For Clunkers went dark in August and auto sales fell through the floor in September. If you do some quick calculations, that means that pulling the rug out from under the Cash For Clunkers program should have resulted in a drop in retail sales of a little more than 1.5% (my calculator spits out 1.56%), a little bit more than it actually dropped. When you look at the segmented figures, most other industries showed a small gain in sales. Excluding autos, retail sales went up 0.5% (which makes my calculation above pretty much right on the money). Because the biggest gainer was gas (on account of gas price increases), excluding autos and gas still nets you a rise in retail sales of 0.4%. A bit anemic, I know, but no cause for distress. And not, I should add, a fundamentally different story than last month’s retail sales gains.

The good news, though, is that September was the first month in 12 months in which general merchandise sales were greater than the same month last year, showing that, despite the precipitious drop in auto sales, consumers really are stepping up to the counter.

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