U.S. Retail Sales Again Rise Due To Higher Gas Prices, But Trend Remains Weak

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.