Retail sales fall 0.4% in March, most in 9 months

posted at 10:01 am on April 12, 2013 by Ed Morrissey

What happens when the President of the United States spends six weeks and millions of dollars spinning horror stories about the economic impact of a 2.3% reduction in government spending?  If you guessed “people spend less money,” you’d be right — and better at economic projection than media economists.  To only their apparent surprise, retail sales dropped in March by the most in nine months:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $418.3 billion, a decrease of 0.4 percent (±0.5%)* from the previous month, but 2.8 percent (±0.7%) above March 2012. Total sales for the January through March 2013 period were up 3.7 percent (±0.5%) from the same period a year ago. The January to February 2013 percent change was revised from +1.1 percent (±0.5%) to +1.0 percent (±0.2%).

Retail trade sales were down 0.6 percent (±0.5%) from February 2013, but 2.6 percent (±0.8%) above last year. Nonstore retailers were up 13.5 percent (±2.3%) from March 2012 and auto and other motor vehicle dealers were up 7.4 percent (±2.1%) from last year.

Here’s the handy chart from Census showing the last three months’ activity:

census-retail-2013-03

 

Color Bloomberg surprised enough to break out the U-word:

Retail sales in the U.S. unexpectedly fell in March by the most in nine months as employment slowed, showing households ended the first quarter on softer footing.

The 0.4 percent decrease, the biggest since June, followed a 1 percent gain in February, Commerce Department figures showed today in Washington. The median forecast of 85 economists surveyed by Bloomberg called for an unchanged reading in March. Department stores and electronics dealers were among the weakest showings.

The figures may prompt economists, who are projecting consumer spending climbed in the first quarter at the fastest pace in two years, to reduce growth estimates. A pickup in hiring and bigger increases in wages will be needed to ensure any slowdown proves temporary as federal budget cuts and an increase in the payroll tax restrain the expansion.

Oh, please.  The end of the payroll-tax holiday took place at the very beginning of January, not March.  Those conditions existed for five solid weeks of increased withholding before February’s decent retail month; why would the impact just get around to showing up in March?  The cuts in federal spending didn’t even affect government payrolls, which only lost 7,000 workers in March, thanks to 14,000 layoffs at the Post Office — which wasn’t hit by the sequester at all.  This is sheer nonsense.

Reuters doesn’t do a lot better, wondering if the weather had as much impact as the PTH expiration:

Retail sales slid in March even though producer prices recorded their biggest drop in 10 months ias the cost of gasoline tumbled. …

The weakness in March retail sales was broad based, with car sales down 0.6 percent and receipts from electronics and appliance stores down 1.6 percent. Sales at clothing stores rose just 0.1 percent. …

Readings for retail sales have been volatile so far this year, making it difficult to know whether the weakness in March was due to a tax hike that went into effect at the start of the year or to temporary factors related to the weather.

February was pretty cold, too, as I recall.  And the very next sentence from Reuters blows up their alternate cause:

Retail sales advanced 1 percent in February, according to revised readings from the government.

When politicians turn into Chicken Littles over slight reductions in government spending, people react by putting off their own purchases.  Amazingly, neither Bloomberg nor Reuters even entertained this possibility in their analyses, even though many of us wrote about the damage the hyperbole would do.


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Liberal spinning up 100% in March.

hillsoftx on April 12, 2013 at 10:04 AM

Obama certainly inherited a mess from his first administration.

Drained Brain on April 12, 2013 at 10:05 AM

Sequester, weather, rabies, cockroach infestations, anything but the horrific policies foisted on us by dolts who couldn’t make correct change on a dollar.

Bishop on April 12, 2013 at 10:06 AM

“What reduction? I spend as much as I did last year.” –Bloomberg

Archivarix on April 12, 2013 at 10:06 AM

Somehow…this is great news! /lsm

trs on April 12, 2013 at 10:06 AM

What happens when the President of the United States spends six weeks and millions of dollars spinning horror stories about the economic impact of a 2.3% reduction in government spending? If you guessed “people spend less money,” you’d be right — and better at economic projection than media economists. To only their apparent surprise, retail sales dropped in March by the most in nine months

Has there ever been an economic report that didn’t surprise these wizards of smart?

Bitter Clinger on April 12, 2013 at 10:08 AM

bayam! Come out and play…

Del Dolemonte on April 12, 2013 at 10:08 AM

All the department stores I go to have been dead lately. And I live in H-Town, TX where the economy is relatively good(at least compared to the nation as a whole), so I can only imagine how bad things are in other parts of the country.

Doughboy on April 12, 2013 at 10:09 AM

My retail sales were down a lot more than that in March. I think they are spinning the numbers big time. It’s much worse than is being reported.

Harbingeing on April 12, 2013 at 10:11 AM

I remember how the media painted any positive Bush economy story with skepticism. I remember in particular the meme that those successful years of economic growth still weren’t making it down to the poor.

Media, what does obama’s poor economy do to the poor?

hawkdriver on April 12, 2013 at 10:12 AM

What’s missing in this analysis is that March is the month in which Easter occurred. Easter is 4th in holiday spending. Spending should be up, based on that. Wait until April.

libertarianlunatic on April 12, 2013 at 10:12 AM

FORWARD!

Good Lt on April 12, 2013 at 10:12 AM

why would the impact just get around to showing up in March?

Because it diverts attention away(poorly) from the failed economic policies of Barack Obama.

Gatsu on April 12, 2013 at 10:13 AM

Obama certainly inherited a mess from his first administration.

Drained Brain on April 12, 2013 at 10:05 AM

lol

PatriotRider on April 12, 2013 at 10:14 AM

The coming forced health insurance policies will kill off many retailers.Look for increased sales at Goodwills and garage sales.

docflash on April 12, 2013 at 10:15 AM

Obama certainly inherited a mess from his first administration.

Drained Brain on April 12, 2013 at 10:05 AM

There was just too much Romney economic plans floating around.

Wait.

Too many Bush economic plans floating around.

The weather was bad for the first 4 years of his term.
The economy was really really really bad.
The dog he didn’t have yet ate the recovery.
Pre-sequester jitters.
ALIENS!

Gatsu on April 12, 2013 at 10:18 AM

Look for increased sales at Goodwills and garage sales.

docflash on April 12, 2013 at 10:15 AM

I can buy my own stuff back.

Recovery SPRING!

Bishop on April 12, 2013 at 10:18 AM

It would help if the gov’t would stop manipulating the data we read in the market. We all know the stock market is rigged now.

stenwin77 on April 12, 2013 at 10:20 AM

Um, Umm, Um,… snowstorms, in –the Midwest! Yeah, that’s the ticket!

slickwillie2001 on April 12, 2013 at 10:21 AM

What’s missing in this analysis is that March is the month in which Easter occurred. Easter is 4th in holiday spending. Spending should be up, based on that. Wait until April.

libertarianlunatic on April 12, 2013 at 10:12 AM

Doesn’t April usually get a boost from people getting their tax refunds and spending them? If we don’t see a spike in retail sales from that, then this economy is truly boned cuz I don’t see anything else coming down the pike between now and Black Friday that’ll increase consumer spending.

Doughboy on April 12, 2013 at 10:22 AM

+1hillsoftx

cmsinaz on April 12, 2013 at 10:22 AM

Bloomberg and Reuters have an agenda to push. Which is totally unrelated to actual REPORTING of events.

GarandFan on April 12, 2013 at 10:23 AM

bayam! Come out and play…

Del Dolemonte on April 12, 2013 at 10:08 AM

Mornings he has to polish the brass posts in his Canadian bank.

slickwillie2001 on April 12, 2013 at 10:23 AM

I can buy my own stuff back.

Recovery SPRING!

Bishop on April 12, 2013 at 10:18 AM

That is the best form of stimulus according to the Pelosi school of made up economics.

Gatsu on April 12, 2013 at 10:25 AM

I blame Obama. If the poor guy hadn’t spent so much time working he and his family could have taken a few more vacations since the beginning of the year. What with the spending by the entourage that accompanies the royal family wherever it goes (including food tasters), these trips are mini-stimulus programs in and of themselves.

Happy Nomad on April 12, 2013 at 10:28 AM

Media, what does obama’s poor economy do to the poor?

hawkdriver on April 12, 2013 at 10:12 AM

“Republicans in Congress [as redacted by HA trolls, when they repeat it: Rethuglans] continue to be obstructionists and oppose President Obama’s common sense economic reforms.”

“I’m just asking those with plenty to do a little more. Get by with one yacht, instead of two!”

(laughter)

“Folks are hurting. We’re in this together.”

Axe on April 12, 2013 at 10:28 AM

That is the best form of stimulus according to the Pelosi school of made up economics.

Gatsu on April 12, 2013 at 10:25 AM

By Jove, I think you’re on to something!

We buy stuff from retail stores, immediately donate all of it to Goodwill, and then buy it back from Goodwill the next day.

OMG…I think you might win the Nobel for this.

Bishop on April 12, 2013 at 10:28 AM

Progressive War on America: Battlefield consumers!

Same war, same ideology, same misery for all……THAT is fair!

PappyD61 on April 12, 2013 at 10:29 AM

Doesn’t April usually get a boost from people getting their tax refunds and spending them? If we don’t see a spike in retail sales from that, then this economy is truly boned cuz I don’t see anything else coming down the pike between now and Black Friday that’ll increase consumer spending.

Doughboy on April 12, 2013 at 10:22 AM

Bottom line- the administration has cooked the books for months to keep from getting a double dip recession. Those accounting tricks have pretty much run their course. We head into the 2014 midterms with the chickens coming home to roost. Not good news for incumbents- particularly of the rat variety.

Happy Nomad on April 12, 2013 at 10:30 AM

Discretionary spending is drying up. So is the desire to take on revolving credit. Add in inflation, and ever increasing regulatory and taxation burdens and you have the makings of a revolution, er, I mean, tax revolt, er, I mean, angry letters written to elected officials who HATE you.

tom daschle concerned on April 12, 2013 at 10:31 AM

Doesn’t April usually get a boost from people getting their tax refunds and spending them?

Doughboy, the EITC crowd has already been through the system. They typically start the last week in January and have blown their wad by mid March.

DanMan on April 12, 2013 at 10:35 AM

We need more unemployment compensation, disability and food stamps to stimulate the economy!

The Rogue Tomato on April 12, 2013 at 10:40 AM

What’s missing in this analysis is that March is the month in which Easter occurred. Easter is 4th in holiday spending. Spending should be up, based on that. Wait until April.

libertarianlunatic on April 12, 2013 at 10:12 AM

It’s possible the seasonal adjustment is a bit off due to Easter, or something is off about February. Speaking of which:

Doesn’t April usually get a boost from people getting their tax refunds and spending them? If we don’t see a spike in retail sales from that, then this economy is truly boned cuz I don’t see anything else coming down the pike between now and Black Friday that’ll increase consumer spending.

Doughboy on April 12, 2013 at 10:22 AM

April usually gets hit due to people paying their taxes (though that would be mostly corrected by seasonal adjusting). Tax refunds, especially the big ones typically come late January through February. This year though refunds were delayed (I worked at the IRS, people weren’t happy, fun times). So it’s also possible that refunds were concentrated in February causing both January and March to look worse by comparison. January also had the payroll tax shock.

Either way, year over year numbers are ok and these numbers will be revised, probably massively, before all is said and done so it’s a bit early to say anything. Though given other less lagging economic figures it’s not hard to guess where retail sales should be heading (in the not good direction).

jarodea on April 12, 2013 at 10:41 AM

Doughboy, the EITC crowd has already been through the system. They typically start the last week in January and have blown their wad by mid March.

DanMan on April 12, 2013 at 10:35 AM

Well, started in February this year but yeah the EITC folks I know still “blew their wad” by mid-March.

jarodea on April 12, 2013 at 10:42 AM

Happy Nomad on April 12, 2013 at 10:30 AM

If the LIE’s didn’t get it in 2012 why would you believe they’ll get it in 2014?

chemman on April 12, 2013 at 10:44 AM

These numbers are unadjusted for price changes, the release says, which I take to mean for inflation. Given how strong inflation has been in consumer goods, I’d bet these numbers presage a build up of inventory in GDP. In other words, unit sales of consumer goods are down even further than this number indicates (thanks to inflation) and GDP “growth” is going to be very weak. Don’t worry though, the Democrat economic policies will keep on working for the good of the politicians and their fundrs: the Fed will just print more money and large corporations and banks will be just fine. As Harry Reid would say, “Screw the rest of America!”

MTF on April 12, 2013 at 10:47 AM

April usually gets hit due to people paying their taxes (though that would be mostly corrected by seasonal adjusting). Tax refunds, especially the big ones typically come late January through February. This year though refunds were delayed (I worked at the IRS, people weren’t happy, fun times). So it’s also possible that refunds were concentrated in February causing both January and March to look worse by comparison. January also had the payroll tax shock.

jarodea on April 12, 2013 at 10:41 AM

Yeah, we filed ours early on as usual(around mid-February) and received our return via direct deposit exactly one week later. If that’s the same turnaround for most folks who use direct deposit, then I guess a lot of that money would’ve been spent already in February and March. BTW, we didn’t spend a dime of our tax refund.

Doughboy on April 12, 2013 at 10:57 AM

MTF on April 12, 2013 at 10:47 AM

Looking at the methodology that is correct, though all of the figures produced ignore inflation. Which is unfortunate since the main 2 measures, GDP price deflator and CPI, don’t really match the sample used here (they’re at about 1% and 3.4% respectively at the moment).

As for an inventory buildup, there has been a run down in inventories over the last year. I haven’t read why but I know expectations for Q1 2013 GDP are high so that wouldn’t surprise me as the reason. Can’t imagine much reason to keep stocking though.

jarodea on April 12, 2013 at 11:10 AM

Yeah, we filed ours early on as usual(around mid-February) and received our return via direct deposit exactly one week later. If that’s the same turnaround for most folks who use direct deposit, then I guess a lot of that money would’ve been spent already in February and March. BTW, we didn’t spend a dime of our tax refund.

Doughboy on April 12, 2013 at 10:57 AM

It’s usually around a week though a lot of the EITC folk use rapid anticipation loans so they get them almost immediately. The delay this year was more in the start I believe, just the people who rush to get their big money in late January had to wait a couple weeks later.

I suspect that’s why February looks so good and thus March by contrast looks worse. I don’t know, the numbers will be revised for the next 3 years at least so not like they’re anything definitive anyways.

jarodea on April 12, 2013 at 11:15 AM

If the LIE’s didn’t get it in 2012 why would you believe they’ll get it in 2014?
chemman on April 12, 2013 at 10:44 AM

Because sooner or later they’ll figure out just how much their tax bill has increased, RatEaredDevilcare costs kick in (another accounting trick coming home to roost), and I don’t see us suddenly generating hundreds of thousands of jobs each and every month (do you?). The facade of a very slow recovery is about to come down around the rat-eared devil.

Happy Nomad on April 12, 2013 at 11:17 AM

Evidently its time for Moochelle and her entourage to go on a Manhattan shopping spree to boost sales figures for April.

hawkeye54 on April 12, 2013 at 11:28 AM

We know that guns and ammunition sales have been off the charts.

jukin3 on April 12, 2013 at 11:35 AM

GAS prices are STILL high. It just went to $3.97 in my neighborhood. I’m putting dollars in my gas tank that I would be using at the store.

The state doesn’t care, because they get the sales tax either way.

The SS additional tax was covering the high price of gas, now, that’s gone so it really is affecting us.

Reduce our gasoline prices and the economy will take off…

originalpechanga on April 12, 2013 at 11:42 AM

bayam! Come out and play…

Del Dolemonte on April 12, 2013 at 10:08 AM

Mornings he has to polish the brass posts in his Canadian bank.

slickwillie2001 on April 12, 2013 at 10:23 AM

No, he’s been here this AM, just on another thread. Doing his very best imitation of Pauline Krugman, as usual.

Del Dolemonte on April 12, 2013 at 11:49 AM

If it wasn’t for guns and ammo sales the whole economy would be in the toilet.

meci on April 12, 2013 at 11:49 AM

Eh. I’m not inclined to blame these “unexpectedly” poor retail sales numbers on Sequestration fear “hyperbole” (particularly considering how ignorant most Americans are of this issue in the first place). Surely the palpably worsening effects of Obamacare and other regulations on family income, which have lead to more unemployment and fewer hours worked -combined with higher taxes on all Americans AND inflationary food and gas prices all play a more important role here.

Buy Danish on April 12, 2013 at 12:07 PM

When Democrats trash talk, people listen…

JoeHanson on April 12, 2013 at 12:37 PM

If it wasn’t for guns and ammo sales the whole economy would be in the toilet.

meci on April 12, 2013 at 11:49 AM

And those are about at saturation point. People are going to start running out of money to buy them with (this IS the Obamacession) and stocks have all but dried up.

MelonCollie on April 12, 2013 at 10:12 PM