Consumer spending: Climbing out of a deep hole
Today’s government report that retail sales rose 2.7% in August looks unambiguously good for the recession-is-ending camp.
The stock market loves it, as key indexes climb to new 2009 highs.
But under the surface the retail numbers suggest that many consumers remain either unable or unwilling to spend aggressively.
The 2.7% jump in August sales -- the biggest one-month rise in three years -- was powered by a 10.6% leap in car sales, which were spurred by the government’s "cash for clunkers" program, as expected.
Among 12 other broad retail categories tracked by the Commerce Department, the next largest percentage increase last month was in gasoline sales, which soared 5.1% as pump prices surged.
Higher spending on gasoline is forced spending for most people, not a sign of economic strength.
Still, although the outsized gains in car and gasoline sales skewed the overall number for August, sales were up 0.6% excluding cars and gas -- beating analysts’ forecast of flat results for that measure, according to Bloomberg News data.
Consumers felt better enough to boost spending on clothing by 2.4% in the month, (back-to-school shopping no doubt helped). Also, sporting goods sales climbed 2.3% and spending on electronics and appliances was up 1.1%.
But two big-ticket sales categories -- building materials and furniture -- showed declines of 1.2% and 1.6%, respectively.
The contraction in spending on building materials and furniture in August suggests that the boost in car sales robbed demand for other expensive goods. Undoubtedly, tight credit also is limiting consumers' ability to step up spending on big-ticket stuff.
One other point to remember on retail results: Sales remain seriously depressed compared with where they were just a year ago.
Overall sales in August were 5.3% below their level of August 2008. Clothing sales were down 5.1% from a year earlier, electronics and appliances were off 10.4%, and furniture sales were down 12.8%.
The economy is climbing out of the hole, but it’s a deep hole.
-- Tom Petruno
Photo: Clunker trade-ins on a lot in Fairfield, Calif., last month. Credit: Justin Sullivan / Getty Images