June Retail Sales Disappoint All But Exxon

The Commerce Department's monthly retail trade and food services report for June, released today, provided the world with a headline that month to month sales volume was up by an estimated 0.6%. We emphasize "estimated" because the figures are compiled from a stratified random sample of 5000 retail and food service firms. More importantly though, when you strip out auto and gasoline sales, the June numbers logged a monthly decrease.

We don't pay much homage to the uptick in auto sales, as that industry is zero-percent-financing it's inventory away in sub prime bubble like fashion. We even know a person who timed the purchase of her new Camaro - financed at zero percent of course - prior to allowing a soured real estate investment slip into foreclosure. She must assume the car can last seven years. This evidence may be anecdotal, but we challenge anyone to claim that it is not happening on a widespread basis.

The retail numbers should only continue along the current trend (declining), as jobs continue to be lost, and wages continue to be cut. Furthermore, severances (for those lucky enough to receive such) and unemployment benefits for many are reaching the end of their precious lives. Spending will be increasingly devoted to essentials, and the trend towards private label grocery products will accelerate. In case you haven't noticed, private labels have been aggressively grabbing prime shelf locations. A couple years ago, our statistics class conducted a campus-wide taste test between "name brand" and "private label" products. For nearly every variety of product (Coca-Cola the notable exception), there was no evidence of a statistically significant preference for the name brand amongst the tasters. People will continue to figure this out, dragging down the retail numbers in a slow and steady fashion.

June US Retail Sales Report Sphere: Related Content