by Bill McBride on 10/15/2008 08:30:00 AM
Wednesday, October 15, 2008
The Census Bureau reports that retail sales plunged in September:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for September, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $375.5 billion, a decrease of 1.2 percent from the previous month and 1.0 percent below September 2007.The following graph shows the year-over-year change in nominal and real retail sales since 1993.
Click on graph for larger image in new window.
To calculate the real change, the monthly PCE price index from the BEA was used (September PCE prices were estimated based on the increases for the last 3 months).
Although the Census Bureaureported that nominal retail sales decreased 1.0% year-over-year (retail and food services decreased 1.0%), real retail sales declined by 4.3% (on a YoY basis).
The stimulus checks appeared to help consumer spending in Q2, but Q3 is very weak. This weakness in retail sales is probably because of the weak job market and less mortgage equity withdrawal (MEW) by homeowners (the Home ATM is empty!).
Retail sales are a key portion of consumer spending and real retail sales are now clearly in recession.
Posted by Bill McBride on 10/15/2008 08:30:00 AM