The Census Bureau Retail Sales Report reported nothing new under the sun (download here).

Auto sales plummeted immediately after the Federal “cash for clunkers” program expired (see chart below), and total sales ex-auto, while up slightly from August, were down significantly from the previous September.

Across the board, virtually all product segments saw declines from September 2008.   Food, general merchandise, and sporting goods were more or less flat and health products were up slightly. But everything else was down, and generally by a lot.

So, while things are improving, we are still a LONG way from a full recovery.

Charles Sizemore, CFA
Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy

The Census Bureau reported advanced retail sales for July today, and we had a few surprises.  Year-over-year, retail sales remain horrid though are showing signs of improvement.  Strangely, autos — which had been seeing year-over-year declines in excess of 20% for most of 2009 — actually outpaced overall retail spending, pulling the averages up!  

The federal “Cash for Clunkers” plan was obviously a major driver of this, so we should take these gains with the proverbial grain of salt.

On a month-over-month basis retail sales were down, breaking a decent run of improving months.  So much for the recession being over….

This is more or less what we expect from the retail economy for the next several years: a positive month here, a negative month there….  Retail sales will not march continuously downward, but they will certainly have a hard time gaining any real momentum.   How could they, given that the largest and richest generation in history is now massively cutting back spending and instead saving for retirement?

Charles Sizemore, CFA

Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy

We took a look at the U.S. Census Bureau’s monthly retail sales report this morning, and we saw a lot more of the same.  Yes, the economy is recovering…but “less bad” does not mean “good.”

U.S. food and retail services sales for June were up 0.6% from May, which was in turn 0.5% higher than April.  But, the sales figures for June 2009 remain a full 9% lower than those of June 2008.  And we should remember that last year’s sales figures were nothing to get excited about!

Month-over-month, the biggest gains were in autos, but again, we should remember the pitifully low levels we are using for base values.  Year-over-year, June auto sales were down 14%  – better than the 25% year-over-year declines we saw in prior months, but truly horrible nonetheless.

ALL retail categories were down year-over-year with the slight exceptions of Health & Personal Care stores (+1.8%) and Food Service & Drinking Places (+0.3%, which is so small as to not be significantly different than 0%).  The greatest weakness continues to be in autos and in areas relating to housing, with smaller purchases and consumer staples holding up a little better.

We don’t expect much to change in the July and August reports when they are released.  We would expect continued incremental growth month-over-month and bad (though mildly improving) shrinkage year-over-year.   The reports for September through December should be more interesting.   Though they were tepid throughout 2008, retail sales did not begin to implode until the last four months of the year.  So, it would not be shocking if year-over-year results appear to improve quite a bit at the end of this year.

But, if this happens, it’s important to not draw the wrong conclusions.  If, say, October 2009 retail sales show strong growth over the October 2008 numbers, this is less a sign of robust recovery and more a sign of just how bad a year 2008 was.   As we wrote in a prior post, this is the “new normal.”

Charles Sizemore, CFA

Co-author of the recently published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy