December Retail Sales Better Than Expected
January 15, 2002
Retail sales were down the last month of the year, but not as much as expected.
On Tuesday the U.S. Commerce Department reported a 0.1% drop for the month, following a revised 3.0% decrease the month before. The news surprised many analysts, who were predicting a December drop of about 1.4% Most of the decline was due to a more than 4% drop in sales of gasoline.
Newport Communications Senior Economist Jim Haughey says given clothing, fuel and food prices declines, December sales probably actually increased 0.1%.
“This puts freight volume in December 0.2-0.3% above the level first reported for November,” he said. “It is even further above the poor expectations for December from Wall Street security analysts over the past few weeks.”
Electronics and appliances stores gained 2% in December, furniture 1.4% and clothing and accessory stores gained 2.6%, even though their sales were off 0.4% from last December.
Haughey says these three categories are mostly discretionary spending and their strength says a lot about consumer confidence.
All year long, consumer spending was said to be the one thing that kept the U.S. economy from falling further into a recession. For 2001, retail sales rose by 3.4%. a big moderation from the 7.6% increase in 2000, but it also showed that consumer spending didn't collapse. Despite this, the increase was the weakest showing since the government began tracking retail sales using the current classification system in 1993.
While last minute cost cutting by retailers helped salvage the holiday shopping season, discounting is expected to take a toll on retailers' fourth quarter profits.