Retail Sales Edge Up

MBA (4/15/2008 ) Velz, Orawin
Retail sales increased 0.2 percent in March following a drop of 0.4 percent in February. Rising gasoline prices helped boost the increase, as sales at gasoline stations jumped 1.1 percent.
Excluding those sales, retail sales were flat. Over the past year, retail sales advanced 1.92 percent, the weakest gain since November 2002.

Sales increased at auto dealers, gas stations, food and beverage stores, restaurants and sporting goods stores. Building supply and department stores saw large declines. Sales at furniture stores posted their eighth consecutive monthly decline. Sales at electronics and appliance stores and clothing stores also dropped.

Retail sales excluding autos, gasoline and building materials—the portions used to calculate consumer spending component of gross domestic product (GDP)—edged up 0.2 percent following a flat reading in February. The average of the first quarter was 0.9 percent annualized gain, compared with 1.9 percent in the fourth quarter.

Retail sales account for about 40 percent of total consumer spending, with spending on services accounting for the rest. The report suggests an anemic growth in inflation-adjusted personal consumption expenditures (PCEs) and thus economic growth in the first quarter. PCEs constitute about 70 percent of GDP. While real PCE growth should slow considerably from the 2.3 percent annualized pace in the fourth quarter, it should remain positive. The last time PCEs posted a quarterly decline was in the fourth quarter of 1991. PCEs managed to grow through all three quarters of the previous recession in 2001.