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By the Numbers

Featuring brief segments of economic analysis from our senior economist Michael Bazdarich, PhD.

The economic analysis we previously featured in By the Numbers is now available on the Western Asset Blog. This page will no longer be updated.


September Retail Sales Disappoint After Several Months of Stronger Gains

Retail sales growth softened in September, and there were downward revisions to previous data. Total retail sales rose 0.1%, following 0.0% in August, revised down from 0.2%, and 0.8% in July, up from 0.7%. The “control” measure of retail sales rose 0.1% in September, following a gain of 0.2% in August, revised down from 0.5%, and 0.5% in July, down from 0.6%. (Control sales focus on consumer-dominated retail sectors by abstracting from sales of cars, gasoline, and building materials, sectors where business purchases are as prominent as consumer purchases.)

As seen in the chart, sales growth looks to have slowed in recent months, but sales levels remain above the trend line that held over 2012–14. In other words, the recent softness only partially offset stronger sales growth seen in the spring.

To this point, even with the softer September data, it is hard to find any weak sectors within retailing. September data showed sales declines at food, electronics, general merchandise (department), and building materials stores, but for most of those, the September softness merely pulls sales levels back to steady growth trends, following stronger gains in spring. The lone exception was electronics stores, where sales have been declining fairly sharply (-5.8%) for a full year.

Aren’t people buying iPhones and other gizmos? Yes, but increasingly, those purchases are occurring online. Sales at “electronic shopping and mail order houses” (i.e., online) are up 11.4% over the last year, more than offsetting the weakness at electronics “brick and mortar.”

We downplayed the spring strength in retail sales, because consumer spending on services hadn’t picked up commensurately and because much of the retail sales growth went to imported goods, with little boost to the domestic economy. Given that perspective, we won’t overplay the recent softness, especially since it only partially returns sales to previous trends. All in all, consumer demand for goods still looks to be growing reasonably well, compared to more adverse performance in the capital goods and exports spaces.

Retail Sales Trends
Retail Sales Trends Chart
Chart Source: Census Bureau. As of 30 Sep 15. “Control” retail sales is total sales less vehicle dealers, service stations and building material stores.

Michael Bazdarich

Product Specialist/Economist

Mike brings more than 45 years of experience to his position. "By the Numbers" will address economic data releases that are pertinent to a broad range of investors.

Prior to joining the Firm in 2005, Mike ran his own consulting firm, MB Economics. He earned his PhD in Economics at the University of Chicago.

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