The Census Bureau of the Department of Commerce released its retail sales report today, Tuesday. The report showed that there was a rise in retail spending of 1.1%. The report showed the total retail sales for the month of February. Sales have been positive in this category since September and the trend is generally up. January’s unexpectedly low 0.4% increase was rooted in a very low auto sales component. The report showed 0.7% growth excluding auto sales. That shouldn’t be a problem this time around however. February showed strong growth in auto sales according to previous reports. Much of that growth may leak into the fleet growth category which is not covered by the retail report.
Food and Gasoline costs are another important factor in this report. Because of their propensity to spend the same amount on consumer goods over time, people will on average buy about the same amount of these essential products every month. A large rise in either the food or the gas component of this report suggests an increase in prices rather than unit consumption. Such a rise was expected in gasoline as prices climb as ongoing disorder crowds middle eastern supply. Other sections to watch in this release include the e-retailing figure which gives an idea of how the internet and other non-store retailers are doing in the current situation. Another technique used to increase the usefulness of the retail sales report is to remove the least stable components and look at the growth in the so-called “Core-Retail” sector. The most volatile segments are auto sales, auto parts, gasoline, and building materials. The growth in retail not including these often shows a much more identifiable trend.
Although these figures are not a perfect proxy for consumption they are the best that exists until the personal income and consumption reports are released. This report does not include services that have been paid for in the month recorded. Services usually make up for around half of total consumption. Even without services however this release is often looked upon as a good indicator of the total consumption as well as consumer mood and the position of the economy as a whole. This number is expected to increase in the coming months as the labor market continues to rebound. Assuming that it will continue on its course retail sales should be one of the first parts of the economy to recover, and should recover at the greatest rate.