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Economy in Brief

U.S. Chain Store Sales Recover With Renewed Holiday Spirit
by Tom Moeller  December 21, 2010

Reports of aggressive promotions paid a dividend last week and spurred retail sales. Sales at chain stores increased 1.7% w/w to the highest level since early-August. However, since the surge followed weakness early in the month, December sales overall remained down 1.0% from the November average. During the last ten years there has been a 66% correlation between the y/y change in chain store sales and the change in retail sales at general merchandise stores. That correlation recently has increased. General merchandise store sales account for 15% of total retail sales.

The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart. During the last ten years there has been a 69% correlation between the year-to-year growth in chain store sales and the growth in general merchandise retail sales. The weekly figures are available in Haver's SURVEYW database.

The leading indicator of chain store sales fell 0.5% last week. This third consecutive weekly drop left the index level at its lowest in four weeks. The composite leading economic indicator is compiled from four series: (1) the MBA's volume index of mortgage applications for home purchase (2) the ABC News/Money magazine's survey of consumer buying conditions (3) new filings for jobless benefits and (4) the 30-year government bond yield.

Challenges Facing the U.S. Economy and Financial System is last week's speech by Terence J. Checki, Executive Vice President, Federal Reserve Bank of New York and it can be found here.

ICSC-UBS(SA, 1977=100) 12/17/10 12/10/10 12/03/10 Y/Y 2009 2008 2007
Total Weekly Chain Store Sales 508.4 499.9 495.9 4.2% 0.1% 1.4% 2.8%
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