Retail sales in August came in much softer than expected. This is important because remember that August is the “back to school” shopping season and one of the stronger retail periods of the year. Unfortunately, that didn’t really occur this year because with consumers already tapped on credit there was only one place to go to find the money – savings. Unfortunately, the average American has not been a good saver over the last 30 years and personal savings are already at low levels.
If we look into the data we see that sales were about evenly mixed. Overall retail sales in August slowed to flat (no change) after rising 0.3 percent in July (revised downward from 0.5 percent). The August figure was below the market median estimate for a 0.2 percent increase.
Excluding autos, edged up 0.1 percent, following a 0.3 percent rise in July (originally 0.5 percent). The consensus had called for a 0.3 percent increase. Gasoline sales rose 0.3 percent after jumping 0.9 percent in July. Sales excluding autos and gasoline in August increased 0.1 percent, following a 0.2 percent rise in July.
Outside of autos and gasoline, sales were mixed. Leading the increase were electronics & appliance stores (up 0.5 percent) and sporting goods, hobby & book stores (up 2.4 percent). Tugging down, the notables were miscellaneous store retailers (down 2.2 percent) and also clothing stores (down 0.7 percent).
Retail sales on a year-ago basis in August came in at 7.2 percent, compared to 8.3 percent in July. Clearly, the August retail sales numbers are somewhat disappointing. We will need to see September numbers for further evaluation but it looks like the consumer is being squeezed here and of course the political antics, weak stock market and economic outlook certainly doesn’t promote stronger consumption patterns. Also, the decline in personal savings is very disturbing – once savings are exhausted, with no real availability of credit, we may run into a major issue.