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Economy in Brief

U.S. Retail Sales Backpedal
by Tom Moeller April 14, 2009

The recent recovery in consumer expenditures stuttered last month. March retail sales fell 1.1% after a 0.3% February increase that was revised up slightly. Some of that stutter reflected less money spent on gasoline but it nevertheless abruptly ended the sales recovery of the prior two months.Moreover, the latest decline in retail sales fell well short of expectations for a 0.3% increase. The retail sales data are available in Haver's USECON database.

Fewer purchases of motor vehicles led the weakness in consumer spending last month with a 2.3% decline. The decline contrasted with the 7.8% recovery in unit vehicle sales already reported by automakers in March. Also somewhat contradictory was a decline of 1.6% in gasoline service station sales despite a 1.8% rise in gasoline prices.

Sales of autos and gasoline were not, however, the main disappointments underlying last month's retail sales report. Sales at furniture, electronics & appliance stores fell 3.8% (-11.3% y/y) and fully retraced the increases of the prior two months. Furniture store sales alone fell 1.7% (-13.1% y/y) after their modest 0.5% February increase while sales of electronics & appliances collapsed by 5.9% (-9.5% y/y), erasing most of the prior two months' gains.

In the soft goods area apparel store sales dropped 1.8% (-5.1% y/y), retracing much of their 2.8% February gain. That decline was accompanied by a 0.2% (+1.3% y/y) downtick in sales at general merchandise stores after two months of strong increase.

And internet purchases suffered as well. Sales at non-store retailers continued their earlier downtrend as they posted a sharp 1.7% drop during March. The downtrend is notable for its duration and magnitude. Year-to-year the decline amounts to 5.0% versus a 2008 gain of 3.7% and the double-digit increases of the prior three years. And dining out did not dull the pain of recession as fewer meals were served outside the home. Restaurant sales reversed their February rise with a 1.4% (+2.2% y/y) March decline.

Building materials sales continued down and posted their eighth consecutive monthly drop. The 0.6% March decline pulled them 9.2% below last year's level.

Four Questions about the Financial Crisis is this mornings speech by Fed Chairman Ben S. Bernanke and it can be found here.

Trends in consumer sentiment and spending from the Federal Reserve Bank of Chicago is available here.

  March February January Y/Y 2008 2007 2006
Retail Sales & Food Services (%) -1.1 0.3 1.9 -9.4 -0.5 4.2 5.8
  Excluding Autos -0.9 1.0 1.6 -6.0 2.8 4.6 6.8
    Less Gasoline -0.8 0.7 1.4 -1.6 1.8 4.2 6.2
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