U.S. Retail Sales Hit Record Low as Economy Heads for Sharp Contraction
Economics / Recession 2008 - 2010 Nov 14, 2008 - 10:27 AM GMTBy: Joseph_Brusuelas
Advance retail sales for the month of October declined -2.8% m/m and are down -3.3% y/y/. The core ex-autos estimate fell -2.2% m/m and is up 1.7% y/y. On a monthly basis ex-gas was down -1.5%, ex-autos and building materials have fallen -2.4%, ex-autos and gas -0.5% and ex-good service -3.1%. On a three month annualized basis sales in the retail and food service sector have fallen -10.9% with the ex-auto estimate down -7.4%.
Inside the data sales were down just about across the board. The sale of motor vehicles and parts declined -5.5%, furniture -2.5%, electronics -2.3% and clothing 1.4%. Sales at department stores dropped -1.3% and non-store retailers dropped -1.8%. Purchases at gasoline stations declined -12.7%, while that of good and beverages was flat. The only major group that saw an increase in sales for the month was the health and personal care category that increased 0.4%.
The decline in retail sales in both the headline and the core exceed the very bearish expectations of the market in just about manner possible and is the worst posting on record. It On an annual basis sales of motor vehicles and parts are down 23.3%, furniture -13.2%, electronics -5.7% and clothing -3.0%. On a three month annualized basis ex-food sales are down -12.4%. This sets the stage for what will be a sharp contraction in overall economic activity during the fourth quarter of 2008 that we think will be -4.1%. If it was not clear before in Washington that the stimulus packages that the new Administration and Congress are going to pass should be well planned, implemented efficiently and be outsized it should be now.
By Joseph Brusuelas
Chief Economist, VP Global Strategy of the Merk Hard Currency Fund
Bridging academic rigor and communications, Joe Brusuelas provides the Merk team with significant experience in advanced research and analysis of macro-economic factors, as well as in identifying how economic trends impact investors. As Chief Economist and Global Strategist, he is responsible for heading Merk research and analysis and communicating the Merk Perspective to the markets.
Mr. Brusuelas holds an M.A and a B.A. in Political Science from San Diego State and is a PhD candidate at the University of Southern California, Los Angeles.
Before joining Merk, Mr. Brusuelas was the chief US Economist at IDEAglobal in New York. Before that he spent 8 years in academia as a researcher and lecturer covering themes spanning macro- and microeconomics, money, banking and financial markets. In addition, he has worked at Citibank/Salomon Smith Barney, First Fidelity Bank and Great Western Investment Management.
© 2008 Merk Investments® LLC
The Merk Hard Currency Fund is managed by Merk Investments, an investment advisory firm that invests with discipline and long-term focus while adapting to changing environments. Axel Merk, president of Merk Investments, makes all investment decisions for the Merk Hard Currency Fund. Mr. Merk founded Merk Investments AG in Switzerland in 1994; in 2001, he relocated the business to the US where all investment advisory activities are conducted by Merk Investments LLC, a SEC-registered investment adviser.
Merk Investments has since pursued a macro-economic approach to investing, with substantial gold and hard currency exposure.
Merk Investments is making the Merk Hard Currency Fund available to retail investors to allow them to diversify their portfolios and, through the fund, invest in a basket of har
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