Retail Sales Hold Steady as Holiday Season Approaches 

Monthly sales figures for October released today by the Department of Commerce show the third consecutive month of increased non-auto sales, said the Retail Industry Leaders Association (RILA). 

Excluding auto sales, retail sales were up 0.2 percent in October. Retail sales are up by 1.5 percent over the past three months and up by more than 3 percent since last December during the worst part of the financial crisis.

“As the important holiday shopping season approaches, steady sales are a welcome sign that consumer angst continues to ease,” said Casey Chroust, RILA executive vice president for retail operations. “October sales gains among core retail segments suggest consumer activity is rising as shoppers return to stores.”

The breadth of gains across many categories of retail sales is an encouraging sign that the economic recovery, while still fragile, has begun to take hold.   Clothing sales were up for the fourth month in a row, while sales at health-related stores such as pharmacies and food and beverage sales marked a third straight month of gains.  Department store sales also increased in October, as did sales at non-store based retailers such as internet sellers.

A broad measure of “core” retail sales that indicates the underlying strength of retail sales to families increased by 0.5 percent in October, and is now up for three months in a row.  Core sales exclude volatile spending on autos and gasoline, as well as, sales of building materials that are mainly purchased by contractors rather than consumers.  Still, the recovery is fragile, and housing in particular remains a lagging sector as shown by continued declines in retail sales of home furnishings and building materials.

Other economic indicators show an economy that has begun to lift off the bottom. Monthly same-store sales released earlier this month by numerous retailers reported positive news as sales edged upward over October 2008.  Increased imports and exports in September likewise indicate a strengthening of demand in the United States and in our trading partners. The labor market remains weak, but declining numbers of initial claims for unemployment insurance suggest that the jobs picture is slowly moving toward stabilization. Finally, recent surveys of purchasing managers in both manufacturers and in services firms suggest an improved economic outlook going forward.

 “Today’s data on retail sales indicate that the economy is shifting from stabilization to recovery, with American families increasing their spending across a wide range of retailers,” said Phillip Swagel, professor at Georgetown University McDonough School of Business and RILA’s outside economist.  “While the job market and the housing industry remain weak, the third straight month of growth in core retail sales shows a firming of underlying demand and a nascent recovery.”

The Retail Industry Leaders Association is the trade association of the world’s largest and most innovative retail companies.  RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

Phillip L. Swagel is a visiting professor at the McDonough School of Business at Georgetown University, where he teaches classes on financial markets and directs the Center for Financial Institutions, Policy, and Governance.  He is also a non-resident scholar at the American Enterprise Institute.

Dr. Swagel was Assistant Secretary for Economic Policy at the Treasury Department from December 2006 to January 2009.  He has previously taught at the University of Chicago, Booth School of Business and at Northwestern University, and held positions at the President’s Council of Economic Advisers, the International Monetary Fund, and the Federal Reserve. 

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