Retail sales aren't rising as fast as envisioned

The report on retail sales for July has just been published by the US Census Bureau. Since July of 2009, retail sales have grown 5.5 percent, but only by 0.4 percent since June of this year. The increase was not as large as they had been estimated to be. Economic indicators are pointing toward a slower recovery. Consumer prices also rebounded slightly after a number of months of slight decline. Economists are closely watching consumer prices, as rising prices in a period of lower employment and lower wages is what means deflation has arrived.

Resource for this article - Retail sales increasing more slowly than anticipated by Personal Money Store.

Slight bump for retail sales

There was a slight increase in retail sales for July. The US Census Bureau reported a gain of 0.4 percent for the month, but that isn't a complete picture. Discretionary spending, or goods like electronics, jewelry, or electronics really fell by 0.42 percent. Discretionary spending is up 2.77 percent from a year ago, according to the Christian Science Monitor. According to the Wall Street Journal, retail sales had fallen in May and June of this year, as May had a dip of 0.3 percent and June slid a further 1.0 percent.

Bulk of gain realized with auto sales

The gains within the retail sales were helped along by automobile sales, confirmed by the profits that Ford and General Motors realized for this last quarter. According to Bloomberg, the bulk of the increase was from individuals purchasing vehicles and, subsequently, gas. All other categories of retail sales combined for a loss of 0.1 percent. Consumer prices also ticked higher. There was a gain of 0.3 percent within the Consumer Price Index, which means the cost of living is increasing when more people are unemployed and underemployed.

Looking out in case of deflation

The restoration is going slower than individuals would like, and unemployment is nevertheless hovering around 10 percent. The Federal Reserve is at the moment looking for signs of deflation, which is where prices of goods increases when less money is available to go around. Less wealth is held in housing, and fewer people are employed fully. Economic indicators are pointing to more individuals saving and less spending, which means individuals are not as confident in conditions as they used to be.

Citations

CS Monitor

csmonitor.com/Money/Paper-Economy/2010/0813/Retail-sales-up-in-July

Wall Street Journal

blogs.wsj.com/marketbeat/2010/08/13/price-retail-sales-data-arrive-in-line-with-expectations/

Bloomberg

bloomberg.com/news/2010-08-13/retail-sales-in-u-s-increased-0-4-in-july-less-than-economists-forecast.html


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