The report this morning about June retail has everyone down in the mouth, but it actually can’t be a bad thing that consumers are pulling back. Contrary to the model of an economy without risk, uncertainty, time, or capital, this is exactly what should be happening in light of the downturn.
The WSJ roundup:
The 0.5% drop in June retail sales was due partly to lower demand for cars and parts, which tumbled 2.3%.
Excluding autos, all other retail sales slipped 0.1%, after falling 1.2% during May. Economists expected a 0.1% dip in June ex-auto sales.
Gas station sales in June tumbled 2.0%. Government data show gas prices fell that month, which would lower the value of station receipts.
Building material and garden supply store sales fell 1.0%, the second big decrease in a row as the effects of government “cash-for-appliances” rebates faded.
Clothing store sales rose 0.6% in June, while general merchandise sales were up 0.2%.
Restaurant and bar sales rose 0.2%. Food and beverage store sales were down 0.5%.
Furniture sales were down 1.1%. Electronic and appliance stores were up 1.3%.
Health and personal care sales rose 0.5%. Mail order and Internet retail sales rose 1.0%.
Sales at sporting goods, hobby, book and music stores plunged 1.4%.
{ 7 comments }
there is no june data at STLFED yet, but PSAVERT doesn’t look equally promising. a jump from 4.0 in may to, say, 4.5 or 5.0 in june would be splendid. i know now that i have paid off a great deal of debt, i am going to target at least 10%.
I lose faith in the (mainstream) economics profession when they talk as if “the economy” crucially depends on retail sales in an industry not “plunging” 1.4% in the midst of a recession.
I mean, seriously, when you worry that it “hurts the economy” when people don’t buy stuff they don’t want, you probably view the economy like some volcano god that demands maiden sacrifices, rather than something that actually exists.
Most platonists view the economy not as a matrix of individual interactions that serve man but rather, as some exogenous “entity” that man must serve and thus, make calls to obviously stupid things such as “buy local” because in their view it is man that must serve the economy.
Daniel: I don’t very often offer a high opinion of the average person’s ability to figure things out. But here I’ll have to say that just about everyone understands that “the economy” consists of the sum total of all monetary transactions. They don’t really think of it as being some abstract god that has to be fed.
Instead, what they see is that most people are employed in the consumer economy, excepting a few places like Washington, DC or military towns, or in the financial center (NYC). And that when people don’t have money to spend, other people lose their jobs as a direct consequence.
They don’t even need a degree in economics to figure that out. Just eyes in their heads.
You’ve got it all wrong. We don’t worry about appeasing the volcano god, we worry about appeasing the Animal Spirits.
“I mean, seriously, when you worry that it “hurts the economy” when people don’t buy stuff they don’t want, you probably view the economy like some volcano god that demands maiden sacrifices, rather than something that actually exists.”
They did that in a South Park episode. And yes, people do view it this way.
has anyone else noticed stores becoming rather empty? A local mall: stores are either selling inventory at drastically reduced prices or thinning out inventory. When asked, a sales clerk said they were making room for “things that will sell and getting rid of things that are not selling well” – I think this sums up retail sales – bleak. Not sure what this is a sign of, but wonder – I guess manufacturing then takes a nose dive (or importing cheap goods) – and then what?
Comments on this entry are closed.