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Kimberly Amadeo

October Retail Sales Down, But Not Because of Sandy

By November 17, 2012

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In October, U.S. retail sales fell .3%.  This was not a result of Hurricane Sandy, even though the storm hit the East Coast October 29. That's because the data in the  Commerce Department's survey had already been collected before Sandy hit. Instead, Sandy's impact on retail sales is more likely to occur in November.

So why did retail sales suddenly drop, after rising 1.3% in September. Auto manufacturers did, in fact, blame the anticipation of the storm. Their sales fell 1.6%, and they said it was because people delayed purchases knowing the storm was coming. (CNBC, Retail Sales Sags as Sandy Slows Automobile Purchases, November 14, 2012)

However, Sandy wasn't even born until October 22, and was not at this time a threat. Warnings weren't widely displayed until the last week of October. (Source: The Weather Channel, Superstorm Sandy)

A more likely explanation is that auto sales fell because auto prices fell in October, according to the CPI report. The Commerce Department's retail report is highly sensitive to price changes, as it does not factor them out. (See October Inflation Report Good for Holiday Sales)

In total, retail sales were $411.6 billion. Although this was down from September, it was a healthy 3.8% higher than a year ago. Since inflation was only up 2.2%, this means demand is growing stronger as the economy slowly improves. (Source: U.S. Commerce Dept, "U.S. Retail Sales," November 14, 2012)

What It Means to You

Sandy will cut into November retail sales. This means stores will be more likely to lower prices to increase their year-over-year sales. Nearly two-thirds of people wait all year to take advantage of these sales to buy things for themselves and their households. This year, it may pay to wait if you are really trying to cut costs.

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