Retail sales fall again in June, third straight month of decline
posted at 10:41 am on July 16, 2012 by Ed Morrissey
Falling consumer confidence led to a third straight month of contraction in the retail sector, dropping 0.5% in June. It’s the third straight month that retail sales have declined, the first time since 2008 that has happened:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $401.5 billion, a decrease of 0.5 percent (±0.5%)* from the previous month, but 3.8 percent (±0.7%) above June 2011. Total sales for the April through June 2012 period were up 4.7 percent (±0.5%) from the same period a year ago. The April to May 2012 percent change was unrevised from -0.2 percent (±0.2%)*.
In May, the auto industry gave the retail picture a bit of a bright spot. As this chart from Commerce shows, that bright spot reversed itself, and the decline went across the board:
Reuters avoids the “U” word, but does note that analysts expected retail sales to rise modestly in June rather than fall:
It was the first time sales had dropped in three consecutive months since late 2008, when the economy was still mired in a deep recession. Analysts polled by Reuters had expected retail sales to rise 0.2 percent. …
The retail data is particularly worrisome because it suggests consumer spending, which drives about two-thirds of the economy, is also sagging.
Sales of motor vehicles and parts dropped 0.6 percent last month. Receipts at electronics and appliance stores declined 0.8 percent. Sales of building materials slipped 1.6 percent, while receipts as gasoline stations dropped 1.8 percent.
Excluding autos, sales fell 0.4 percent.
I’m not sure why Reuters expected an increase. Consumer confidence indices had all shown declines over the last several weeks. The last three jobs reports showed job creation had slowed to sub-population-growth rates, meaning that the economy was going backwards for workers. Even the decline in gas prices mainly stopped in June, meaning that disposable income would have stopped growing (and shrinking, too). Under those circumstances, a spike in spending seemed unlikely.
Reuters notes that this will make Barack Obama’s re-election pitch more difficult, giving Mitt Romney another entrée to discuss the failing economy. However, that’s not most dangerous risk for Obama in this report. These numbers show that consumers already know that the economy is failing, and are pulling back on spending decisions as the storm approaches. It’s a better measure of voter assessment of the economy than polling provides, and that’s the real problem for Obama in these numbers.
Update: Manufacturing sales dropped slightly as well in May, while inventories rose:
Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for May, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,245.2 billion, down 0.1 percent (±0.2%)* from April 2012 and up 5.1 percent (±0.4%) from May 2011.
Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,578.4 billion, up 0.3 percent (±0.1%) from April 2012 and up 5.2 percent (±0.3%) from May 2011.
Update II: The reason this is the “worst quarter since 2008” is that it’s the first time in four years that retail sales have declined for three straight months, which was in the Reuters excerpt :
It was the first time sales had dropped in three consecutive months since late 2008, when the economy was still mired in a deep recession. Analysts polled by Reuters had expected retail sales to rise 0.2 percent.
Since people tend to look at “worst” in terms of actual dollar figures, I’ve edited the headline to remove that.