According to the monthly Commerce Department report, retail sales, which account for about one-third of US gross domestic product, jumped a surprising 1.0% in January, after a downwardly-revised 3.0% decline in December and a 2.4% drop in November. It is the first monthly increase since June 2008 and the largest since November 2007. And rising gas prices didn’t have much affect on the number either, as retail sales ex-gas were still up 0.9%. In the last year though, total sales are down a staggering 9.7%.
The data reported by the government is not adjusted for any price changes. This basically means that the government numbers may be overstated when prices are rising, and understated when prices reverse course. And considering we are in the midst of a deflationary environment, except, say for gas prices in the last month, this seems to be better news than at first glance. So, once again, I must ask. Are consumers really cutting back in epic proportions, causing our consumption-driven economy to be on the brink of collapse, as it’s being reported, or is this just a case of extreme deflation coupled with an absolutely normal cyclical recession?
Report Details (via MarketWatch):
January’s sales of durable goods were mixed. Auto sales rose 1.6% after having fallen 2% in December.
Sales at furnishing stores fell 1.3% and sales at building materials stores dropped 3.2%. However, sales at electronics stores rose 2.6%.
Sales of nondurable goods were mostly higher in January.
Sales at general merchandise stores rose 1.1%, despite a 0.3% decline at department stores.
Sales at apparel stores increased 1.6%.
Sales at food stores rose 2.1%, the biggest increase in more than two years. Sales at restaurants increased 0.8%.
Sales at health and personal care stores were flat.
Sales at stores catering to leisure-time activities, such as reading and sports, sank 0.5%.
Sales at nonstore retailers, such as catalogs and online stores, rose 2.7%.
Retail sales had fallen for six straight months before this report.
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