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Kimberly Amadeo

June's Drop in Retail Sales Not a Cause for Alarm

By July 17, 2012

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In June, retail sales fell .2% to $404.6 billion. Like last month, the drop was partly a result of  lower gas prices, since the Commerce Department doesn't adjust for inflation. Gas station sales fell another 1.8%, after dropping 2.2% in May. However, retail sales overall were still 3.8% higher year-over-year. Part of this was driven by a 1.7% increase in prices, but much was also due to an ongoing shift to online shopping, a boost in auto sales, and a bit of a rise in clothing sales.

Who were retail's winners and losers? First, the winners:

  • Online sales were up a modest .5% in the June, but that was a healthy 10.9% rise in the last year. Online shopping provides real value, in terms of convenience and ease, in addition to lower prices.
  • Auto dealers saw a .7% increase last month, an 8.1% increase over last year.
  • Clothing stores were up .2% for the month, which was 3.4% better than last year.

The losers were:

  • Electronics and appliance stores saw a .8% drop in June, and a 1% decrease since last year. This is because of competition from online.
  • Department stores lost .7% in sales last month, contributing to a 3.2%  loss for the past 12 months.

Then there were the mixed reports -- down for the month of June, but up for the year:

  • Building and garden supply stores sales took another hit, falling 1.6%  for the month, up just .6% for the year.
  • Sporting goods/hobby stores were down 1.5% for the month, but up 4.4% for the year.
  • Health/beauty stores each saw their sales fall .7% in June, but up .6% for the last 12 months.
  • Furniture stores were down .8% for the month,  but up 7.8% for the year.
  • Restaurants were down .2%, although this was a 6.3% increase over last year. (Source: U.S. Commerce Dept, "U.S. Retail Sales," July 16, 2012)

What It Means to You

Many news reports worry that last month's drop in consumer spending means that the economic recovery is slowing. In fact, GDP growth is projected to come in at between 1-2% for the remainder of this year.  However, remember that part of this drop is because of deflation in gas prices.

More important, pay attention to the sectors, such as online, that are growing. This will give you a clear indication of where to invest your money, or what skills will help you in the job market.

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July 26, 2012 at 10:49 pm
(1) Moko says:

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