Posted by Marcelo Perez

According to the monthly Commerce Department report, retail sales, which account for about one-third of US gross domestic product, fell slightly in February, following an upwardly-revised 1.8% spike in the month of January. Total sales in February decreased 0.1%, much better than the 0.4% decline forecasted by economists. January’s gain was the first monthly increase since June 2008 and the largest since November 2007. Add that with February’s essentially flat reading, and you have a 1st quarter that is greatly exceeding expectations. What does that say about this quarter’s GDP number?!? In the last year though, total sales are still down a staggering 8.6%.

The data reported by the government is not adjusted for any price changes. This means that the government numbers may be overstated when prices are rising, and understated when prices reverse course. And considering we are in the midst of a deflationary environment, except, say for gas prices in the last couple of months, this seems to be better news than at first glance. So, once again, I must ask. Are consumers really cutting back in epic proportions, causing our consumption-driven economy to be on the brink of collapse, as it’s being reported, or is this just a case of extreme deflation coupled with devastating fear in an absolutely normal cyclical recession?

Report Details (via MarketWatch):

Gasoline station sales rose 3.4% on a 7% increase in retail gasoline prices.

Sales excluding both gasoline and autos rose 0.5% in February after a 1.4% gain in January.

Despite the surprising strength in the first two months of the year, retail sales are down 10.3% compared with the first two months of 2008.

Auto sales dropped 4.3%, the biggest decline since October. Motor vehicle sales were down 23.5% compared with a year earlier.

Sales of other durable goods were stronger. Sales at furniture stores rose 0.7%. Sales at electronics and appliance stores rose 1.2%.

Sales at hardware stores fell 0.2%.

Sales at general merchandise stores jumped 1.3% following a 1.1% gain in January. Sales at department stores rose 1.1%.

Sales at clothing stores rose 2.8% after a 4.9% gain in January.

Sales at stores catering to leisure-time activities, such as reading and sports, rose 0.2%.

Sales at food and beverage stores fell 0.7%. Sales at restaurants and bars fell 0.2%.

Sales at gas stations rose 3.4% in February and were down 32.3% compared with last February.

Sales at health and personal care stores rose 0.6%.

Sales at nonstore retailers, such as online stores and catalogs, rose 0.3%.

Retail sales had fallen for six straight months before this year.

Read the Full Report.

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