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By New_Deal_democrat February 12, 2015 10:03 am
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Weak US retail sales: all about gas

As the weekly indicators for consumer spending have foretold, January retail sales disappointed.  Once again, Gallup's consumer spending report, which actually turned negative YoY for several weeks in January, proved its value as a real-time indicator.

So why have retail sales suffered for the last two months?  It's all about gas prices.  Here's a list of total retail sales, gasoline sales, retail sales ex-gas, and real retail sales ex-gas beginning with October:

Oct   $445.3   $43.5   $401.8   $401.8
Nov   $447.1   $42.0   $405.0   $404.6
Dec   $443.3   $39.0   $404.3   $403.7
Jan   $439.8   $35.3   $404.5     n/a

(Note I used CPI ex-energy as the deflator for real retail sales ex-gas)

Once we subtract gasoline purchases from the equation, we see that November, December, and almost certainly January have all been higher than October. Ex-gas, real retail sales were down -0.2% in December, and probably faded slightly again in January.

Last week we saw that personal saving increased in December, as shown in this graph:

It probably increased in January again.

There is some actual weakness in the retail sales numbers, compared with November, but it is very slight.  The lion's share of the story behind retail sales is that, so far, consumers have chosen to save rather than spend their savings on gas prices.

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