The U.S. Census Bureau announced that the advance estimate of U.S. retail and food services sales for October was up a surprisingly strong 1.4 percent from the prior month.
The 1.4 percent gain exceeded the 0.9 percent increase expected by a consensus of economists surveyed by Briefing.com. Total retail sales reached $347.5 billion in October. The estimate is adjusted for seasonal variations and holiday and trading day differences.
The gain in sales is due largely to a 7.4 percent increase in auto sales in October. In September car sales fell 14.3 percent after the government ended its cash for clunkers program August 24.
For the first time since November 2007, right before the recession started, auto sales are higher than a year ago.
The rebound looked especially strong because the Commerce Department substantially revised its September data downward. Sales were down 2.3 percent in September, not the 1.5 percent originally estimated.
But broader consumer spending remains volatile, raising questions about whether or not the economy is really in recovery. When auto sales are excluded from the numbers, the overall rise was 0.2 percent. This lower percentage change does question whether or not the economy is really growing as much as reports say.
So where are consumers spending their money outside of auto sales? Consumers spent 1.2 percent more in October at restaurants and bars. Spending in these places has also risen from last year by 1 percent. Non-store retail such as Internet and mail order also went up, posting a 1 percent gain over the previous month.
Sales are down in sporting goods, hobby, book and music stores by 1.2 percent. Building materials and garden supplies are also down 2.4 percent from September. Building material sales are typically highly unstable and generally can be strongly connected to the overall housing market.
With the holiday in full swing, retailers are hoping for an increase in retail sales in October. Sales manager Freddy Aguero from MetroPark, a clothing store at NorthPark Center, says that he hopes the .4 percent increase in sales at clothing and clothing accessories stores means these numbers will carry into the holiday shopping period and bring in big sales.
“Winter holiday sales are always the most important time for our store,” said Aquero. “I hope that the increasing retail sales mean that this holiday season people will have a willingness to go out and spend money.”
With unemployment at a 26-year high of 10.2%, Aguero says that this increase helps soothe worries that consumers are strapped for cash. October sales give hope to the idea that consumers might begin spending again even in the absence of government incentives like cash-for-clunkers.
Shopper Vicki Kopp from Arlington says that she plans to spend her money this holiday season.
“Last year I really cut back because I lost my job,” Kopp said. “But this year I have been saving up preparing for the holiday season, and I am ready to make up for last year.”
But other spenders are more hesitant about exactly how much they will buy this holiday. Shopper Ethel Sedlock from Dallas says that she is not ready to go out and spend the big bucks this winter.
Total retail sales are 1.7 percent below October a year ago. Retail sales started to fall off dramatically starting in September 2008 .
This drop off in sales from last year is mostly in response to a 15 percent drop in gasoline and building
materials sales.
According to the census, total sales for the August through October 2009 period are up 1.5 percent from the same period a year ago, despite lower sales in October 2009.
