Binge and bunk
It is not unusual in my house and the houses of my relatives for the male members of the family eat tremendous amounts of food at the Thanksgiving table, and then saunter off to the couch to watch football and in quick succession fall asleep. The American consumer seems to be exhibiting the same "binge and bunk" behavior.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $350.1 billion, a decrease of 2.1 percent (±0.7%) from the previous monthThe end of the auto buying spree has clearly wreaked its revenge in the data. Motor vehicle and parts dealers saw a stunning -12.0% (SA) change in but a single month. Eliminating the "noise" from this sector shows overall retail and food service sales actually increasing 1.0%. But again, much of this is due to rising gas costs. Gasoline station sales were up 4.4% on the month. Total retail and food sales minus autos and minus gasoline (I'll call it TMAMG) were up just 0.53%.
Now believe it or not, this rate in TMAMG is better than in July when it was 0.0% or in May when it was 0.01% or March when it was 0.05%. But compare 2005 thus far to 2004 and you see the slowdown. In 2004 there were 5 months when seasonally adjusted TMAMG growth was below 0.6%. So far in 2005 we've had 5 and it's only August.
When one looks at a July personal savings rate of -0.6% or a personal savings rate over the last four months (April-July) of 0.0%, we shouldn't be too surprised to see American consumers beginning ever so slightly and ever so reluctantly to move over to the couch after the big binge. We'll continue to buy our gasoline to put in our new cars, but we're not going to be spending on much of anything else.
In short, this retail data -- not just for August but for the whole year -- suggests we are hitting the wall. Katrina may be slapping us up against it for the next month or two, but it's not primarily her fault. That big fat share (70%) of US GDP which is consumption expenditures just can't contribute that 2-3% of overall real GDP growth any more without big new influxes of debt or income. Looking out onto the American consumer horizon, all I can see is government-debt-supported post-Katrina consumption. But how much?