Updated: 13-May-09 09:12 ET

April Retail Sales

Updated: 13-May-09 09:12 ET

Highlights

• April retail sales fell 0.4%.  This followed a decline of 1.3% in March. 
• Excluding autos, retail sales declined 0.5% after a 1.2% decline in March.
• A 2.8% decline in electronics and appliance stores and a 2.3% decline in gasoline stations were the primary drags for April sales while health and personal care stores (+0.4%), sporting goods (+0.3%), building materials (+0.3%) and motor vehicle and parts dealers (+0.2%) provided some offset.

Key Factors

• It is starting to look like the consumer spending gains in January and February were just rebounds off a very weak fourth quarter, supported by strong seasonal factors. 
• It can certainly be argued that there is some stabilization occurring in consumer spending.  The April decline in retain sales is not particularly large and suggests that the comprehensive personal consumption expenditures for the month will be near flat.
• Nevertheless, the markets have been looking to a rebound in consumer spending as a signal of overall economic recovery later this year.  The two months in a row of declines in consumer spending don’t support that argument quite yet. 
• With unemployment continuing to rise and wage gains stagnating, the outlook for consumer spending remains poor.

Big Picture

• Retail sales fell off dramatically starting in September.  That was when the financial markets fell apart and the news became apocalyptic.  Auto sales have also collapsed as the news of potential auto company bankruptcies dominated headlines.  Retail sales are likely to remain weak for quite a while given the current trends in employment, and the negative wealth impact for depressed prices for homes and stocks.