Posted by Joseph Y. Calhoun, III

Retail sales rose in October:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for October, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $347.5 billion, an increase of 1.4 percent (±0.5%) from the previous month, but 1.7 percent (±0.5%) below October 2008. Total sales for the August through October 2009 period were up 1.5 percent (±0.3%) from the same period a year ago. The August to September 2009 percent change was revised from -1.5 percent (±0.5%) to -2.3 percent (±0.3%).

Retail trade sales were up 1.4 percent (±0.7%) from September 2009, but 2.1 percent (±0.5%) below last year. Gasoline stations sales were down 15.0 percent (±1.3%) from October 2008 and building material and garden equipment and supplies dealers were down 15.0 percent (±1.8%) from last year.

There is some pretty good news in this report. The obvious surprise, for most people anyway, is the renewed rise in auto sales. I have said previously that auto sales should rebound to the long term average of around 12 million units over the next couple of years due to the aging of the existing stock. Also surprising is the resilience of sales outside autos. The ten month totals for 2009 are down significantlly from 2008 but the trend is improving as the last three months show an actual gain over last year. In addition, a big part of the drop sales this year is due to the big drop in gas station sales which is related to the price of gasoline. The bottom line is that the economy is recovering and retail sales with it. No one has ever gotten rich betting against the US consumer.