Thursday, February 12, 2009

Did Retail Sales Jump 1%?

Well, yes, but as I've said before the devil's in the details. Technically, retail sales were estimated to have bumped up 1% from December's sales to $344 billion (plus or minus .5%). However, sales for January were still down 9.7% from January of 2008.

The major media outlets keep running the "SURPRISING JUMP IN RETAIL SALES" story. Please. Overall, there was an estimated $3.7 billion jump in retail sales in January from December. Much of the jump was due to increased sales at gas stations (gas prices bumped up about 10 cents in January and continue to climb, despite falling oil prices), grocery sales and electronics sales. The gas station and grocery sales are most likely explained by higher prices. Anyone that's been grocery shopping recently can tell you that prices are still climbing despite weakness in the economy.

However, there was some surprising strength in electronics stores and non-store retailers (online stores). Perhaps the push to switch to digital TV faked some consumers into upgrading their TV in January ?? I'll look to find an answer to that later this week.

Again I think it's important to look at the trend, not the month to month moves. The individual moves are mostly white noise - look at the year over year trends or a series of consecutive months (if we see a real pick up in sales that is not driven by price increases for example) before drawing any conclusions about the "strength" of the economy.

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