Retail Sales Fall, but Not as Bad as Expected

Today the Commerce Department released their figures on retail sales for the month of September. The numbers showed a 1.5 percent decline for the month. At first glance that might seem like a bad thing, but when you delve further into the statistics its really nothing to be worried about. The number is actually much better than the 2.1 percent decline that economists had predicted for the month.

The decline for September was actually less than most people were expecting. The decline was inevitable after the Cash for Clunkers program had pushed auto sales way up, and in turn retail sales way up, for the month of August. Like pretty much all the stimulus programs, Cash for Clunkers was merely a band-aid that people knew would have little effect. All it did was push anyone on the verge of buying a car, over the edge. So basically you got all of July, August, and September’s auto sales contracted into the month of August. People that planned to buy a car in July, waited until August. People who planned for August, of course still purchased. While the people who might have waited until September, decide to push it up a bit. I don’t think it really had any real effect besides changing people’s timing.

The good news from the month of September’s sales is that if you take away autos and auto parts, sales actually rose 0.5 percent. That’s taking away the skew that the Cash for Clunkers band-aid put on the numbers. The rise here was actually more than the analysts expected rise of 0.2 percent, over double the predicted numbers actually. This shows that people might be gaining confidence as our economy ever so slowly emerges from out of the hole of the recession. Just like other areas have shown, its going to be a slow change but at least it seems to be happening.

Further good news might be coming in the upcoming months as the end of the year is generally the strongest part of the year for retail sales. The day after Thanksgiving is the biggest shopping day of the year, and the weeks right up until Christmas are usually no slouch either.

The job market continues to be the major problem area in our climb back to an effective economic level. That seems to be the area that needs the most attention. As soon as that gets straightened out, one has to just naturally expect retail sales to begin to surge again. There in lies the problem though, people need money to spend money.

When compared with last year, the retail sales numbers certainly look much better. Last year saw sales start to slow during the summer and then really took a major nosedive in October, November, and December. This year we appear to be on a slight upswing heading into these make or break months. Right now we just have to hope and pray that things keep heading in the right direction. A good 4th quarter of retail sales would be a major sign that maybe this thing is really over. So keep your fingers crossed people and do your part to make this a great Christmas season!