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Economy in Brief

U.S. Retail Sales Again Rise Due To Higher Gas Prices, But Trend Remains Weak
by Tom Moeller July 14, 2009

Weak job growth and rising gasoline prices continued last month to constrain consumer spending. A 0.6% increase in June retail sales was near expectations and followed a little-revised 0.5% gain during May. However, except for a rise in gasoline prices and a modest gain in auto sales, consumer spending slipped for the third straight month. The retail sales data are available in Haver's USECON database.

Auto sales did manage a 2.3% increase (-14.1% y/y) in dollar terms despite a slight decline in unit vehicle sales during the month. Without the auto sector, retail sales increased a modest 0.3%.

The latest retail sales figures have been dominated by higher prices for gasoline. Last month, sales of gasoline service stations jumped 5.0%, the same as they did during May. (Lower prices versus last year, however, did cause sales to fall by nearly one-third versus 2008.) The June gasoline sales gain was driven by a 16.1% (NSA) rise in the retail price for a gallon of gasoline to $2.63 per gallon.

Emphasizing the persistent weakness in underlying consumer spending were retail sales excluding both autos and gasoline. They fell 0.2% (-4.0% y/y) last month for the fourth consecutive monthly decline. These sales have risen just at a 1.1% annual rate since December following last year's 2.8% 12-month decline.

Further evidence that discretionary spending remains under pressure was the slight 0.4% increase in sales at furniture, electronics & appliance stores (-12.0% y/y) which followed declines during the three prior months. Furniture store sales alone ticked up 0.2% (-12.6% y/y) while sales of electronics & appliances made up their May decline with a 0.9% increase (-11.5% y/y). So far this year, these sales have fallen at a 5.2% annual rate after last year's 4.5% decline. In the soft goods area, apparel store sales were unchanged (-6.2% y/y) while sales at general merchandise stores fell 0.4% for the fourth consecutive monthly decline (-3.0% y/y).

For the first month in five, internet and catalogue purchases rose. June sales of non-store retailers gained 0.6% (-6.7% y/y), after rising 2.8% in 2008 and 7.1% during 2007. Adding to the gloom, restaurant sales declined 0.9% last month, tempering restaurant sales gains so far this year to a 3.3% annual rate.

Building materials sales in fell 0.9% last month and they were down at a 7.4% annual rate since December.

Recourse and Residential Mortgage Default: Theory and Evidence from U.S. States from the Federal Reserve Bank of Richmond can be found here.

  June May April Y/Y 2008 2007 2006
Retail Sales & Food Services (%) 0.6 0.5 -0.3 -9.0 -0.7 3.3 5.3
  Excluding Autos 0.3 0.4 -0.3 -7.9 2.5 3.9 6.3
    Less Gasoline -0.2 -0.1 -0.3 -4.0 1.6 3.6 5.7
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