The Commerce Department reported(.pdf) that U.S. retail sales contracted in March, their sharpest decline in nine months, as payroll tax hikes and government spending cuts may finally be taking a toll on consumer spending.
In a broad-based decline, retail and food service sales fell 0.4 percent in March after a gain of 1.0 percent in February. Excluding autos, sales over the last two months showed the same result and both were at the lowest end of the range of analysts’ estimates.
As shown above, there is now a clear downward trend in retail sales on a year-over-year basis, last month’s scant 2.8 percent gain being the smallest increase since shortly after the recession ended. Since this data is not adjusted for inflation or population growth, the current comparison to year-ago levels represents little or no increase.
Another way to look at this sometimes volatile data series is to consider the 6 month moving average and, in recent months, this measure has dipped below the long-term average gain of 0.32 percent as shown below.
The last time retail sales dipped below the long-run average was last year, leading up to the debt ceiling crisis over the summer.
Last month’s sales declines were paced by a 2.2 percent drop at gasoline stations, but electronics store sales fell 1.6 percent, general merchandise sales were 1.2 percent lower, and sporting good sales fell 0.8 percent.
The impact of the U.S. housing boom was evident as furniture store sales jumped 0.9 percent and sales at home improvement stores rose 0.1 percent.
All told, this was a poor result, but falling gasoline prices played a key role in pushing sales lower and a warm winter may have pulled spring sales forward, though, the smoothed six month average argues that a long-term slowdown is in progress.
Source: Iacono Research
