A key indicator on the state of the economy is the monthly retail sales index. Over the past several months, retail sales have been the driving force in the midst of financial turmoil riddled with layoffs and unemployment.
Not to be outdone by news of other sectors of the economy, the retail sector posted another strong month. The October retail sales index grew at an unprecedented 1.2 percent. The increases were fueled by the impressive earnings releases of the auto industry and e-commerce websites. The months of August and September were strong months as well.
The U.S. economy has been riddled with fears of the recession and a possible double-dip recession. The fear associated with a double-dip recession is the economy falling under another recession prior to recovering from the first. Although the retail sales show promise, economists are concerned that the spending of the consumer will not assure consistent growth.
The major winners in the retail sales gains were the auto industry. Not since August of 2009 has the auto industry seen such positive gains. Overall, for the month of October, the auto industry saw an increase of 5 percent versus last year. Equally as impressive as their current monthly gains is the 6.3 percent sales growth over the past three months.
Taking the automotive industry out of the equation, the remainder of the retail sector grew by only 0.4 percent. September saw non-automotive sales in the retail sector grow at 0.7 percent and 0.9 percent in August. Although the retail business is remaining consistent, department stores are not seeing the foot traffic to drive sales. Many stores were discounting goods such as electronics, appliances, and home goods.
Retail stores did see increases in the leisure spending in the areas of music and reading. Typically not a sector which sees increases during limited consumer spending, music and reading saw increases from the expanded sale of the iPad to additional retailers.
The retail sector will be watched closely during the upcoming months to see if the trends will continue during the holiday shopping season.
Source: Martin Crutsinger, “Retail sales rise is led by higher auto purchases” Associated Press Economics Writer