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Economy in Brief

U.S. Chain Store Sales Lose Forward Momentum
by Tom Moeller   June 7, 2011

The consumer recently has shown an indication to pull back from past, strong spending trends. Like last month's decline in vehicle sales, chain store sales fell 2.2% in May. In addition today's news of a 0.4% w/w uptick in store sales last week nevertheless left them down 0.3% from the May 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 leading indicator of chain store sales has held roughly constant in May versus April, and it was up just 0.7% y/y. 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.

The chain store sales data are in Haver's SURVEYW.

ICSC-UBS (SA, 1977=100) 6/4/11 5/28/11 5/21/11 Y/Y 2010 2009 2008
Total Weekly Chain Store Sales 516.0 513.8 512.0 2.5% 2.9% 0.1% 1.4%
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