The retail sales report from the US Census Bureau this morning shows that sales slumped from September to October; ticking down .3% after an increase of 1.3% from August to September. While negative growth is never good, the intermonth change is not quite as important as the year over year growth. Since October 2011, retail sales have grown by 3.8% and the numbers from August to October 2012 are up 4.7% from the same period last year.
In the last two months, reports have shown that the job market is steadily growing. More people have been able to find employment, and keep employment. With so many people getting back to work, why are the sales reports down for the month of October?
Hurricane Sandy made landfall on October 30th. This storm was one of the biggest the northeast has ever seen, and fortunately there was plenty of warning before it hit. This meant that people had time to buy disaster preparation material and to stockpile goods and food. But what the storm also meant was that toward the end of the month, shopping dropped off. Nobody was going to go out and shop the last two days of the month, and many quit well before then. Even in the early parts of the month, people were awaiting the storm, one that was likely to bring a lot of devastation. During this time people were not shopping for automobiles.
As can be seen in the report, general merchandise sales were up slightly. But autos were down considerably. A good portion of the US population lives on the East Coast, and not many people were going to go purchase a new car or truck just before a hurricane came. Rather than make that large purchase, they were waiting until after the storm came through in order to continue their shopping. Combine the storm preparation and the anticipation of the election in the first part of November, and people simply were not out there buying as many goods.
Jobs reports are looking good. The economy is making a slow and steady recovery. Despite what many are still seeing on the media, corporations are hiring, people are building and buying homes, and things are gaining momentum. Although the October retail sales report is down slightly, economists have high expectations for November as the holiday shopping season gets underway.