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Friday, November 14, 2008
Retail Sales Fall 2.8% in October
Adam Samson
FOXBusiness
Americans continued to cut back on retail spending in October as the financial crisis put people in a more conservative financial frame of mind.
The Commerce Department said Friday retail and food sales fell 2.8% from September, and 4.1% from the October 2007. The month-over-month decline is the largest in 16 years, and surpasses the previous record set in November 2001.
"Consumers were already fighting to keep their heads above water in the third quarter, and in October they were thrown several heavy cement blocks in the form of steep declines in employment and hours worked, further declines in house prices, and a massive negative shock to household net financial assets," IHS Global Insight Chief U.S. Financial Economist Brian Bethune wrote in a research note.
Motor vehicle and parts sales took the biggest hit, sinking 5.5% from September, and down 23.4% from the same month last year. Economists are pessimistic about the near-term future of auto sales, although some note that it is possible that the pace of the slowdown will moderate.
"Auto sales will remain very depressed but they cannot keep falling at their recent pace ... for much longer," High Frequency Economics Chief U.S. Economist Ian Shepherdson wrote in a research note.
Furniture and home furnishing sales also took a hit, falling 2.5% on a month-over-month basis and 13.5% on a year-over year basis. Appliance, electronics, sporting goods, building material, clothing and general merchandise stores all saw lower sales in October.
There were, however, a couple of bright spots: food and health stores both reported better months in October from September.
Retail sales are a so-called nominal reading, which means the numbers are not adjusted for inflation. This implies that falling prices could potentially deflate the reading without real spending actually falling. Indeed, gasoline sales plunged 12.7% from September, mostly due to a rapid decline in gas prices.
Still, economists say falling retail sales could amplify other downward economic trends.
"The steep dive in retail sales is also feeding back to reduce employment in the retail sales sector at a critical time of the year," Bethune wrote.
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Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
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