Retail Sales

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights retail sales and import/export prices.

• The retail sales figure for January was released this morning.  The figure rose a dissapointing 0.4% between December and January and was up 5.8% from last year.  The year-over-year rate is a decline from last month’s 6.2% 12-month growth rate.
• While the headline figure slumped on a 1.1% decline in automobile sales, volatile gasoline and food and beverage sales jumped this month.  Relative to last year, sales as furniture and home furnishings as well building materials dealers have expanded, while sales of appliances and electronics have fallen, but with a bottoming trend.  This trend reflects home improvements that accompany the growing home sales trend over this winter, but might also reflect a frugality as consumers shift to home improvements over appliances.
• Both of today’s data releases reflect the impact of growing gasoline prices.  Excluding gasoline, consumer spending was solid for the month and non-fuel import prices were tame.  However, the sharp increase in the price of imported fuel may weigh on consumers as they devote more of their income to gasoline as reflected by the increase in expenditures on gasoline by consumers in the retail sales report.  If this trend is temporary, it will have little impact on consumer spending and sentiment, but it if is sustained, it could weigh on sentiment and restrain consumer spending in other areas of the economy.  Furthermore, higher gas prices will weigh on businesses that involve trucking or driving like REALTORS®.
• Today's data further confirms that GDP is likely growing at a subpar pace of about 1.5 to 2.0 percent in the first quarter (data due out in late April), compared to a decent 3.2 percent growth rate in the fourth quarter of last year.  Assuming that it is "the economy, stupid," how will the voters act in an election year with an economy that is growing but not robustly?