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Retail Sales Are Up, But Is That the Full Story?: Here’s What You Need to Know

Jan. 15, 2013 12:43pm Becket Adams

The Commerce Department announced Tuesday that retail sales rose 0.5 percent in December from November, slightly better than November’s 0.4 percent increase and the best showing since September.

But before you start doing your “the economy’s back” dance, let’s take a closer look at the report.

A 1.6 percent jump in sales of autos and auto parts led all categories. Car companies closed out their best sales year since 2007. Total retail spending was even stronger when factoring out a drop in gas prices. Excluding a 1.6 percent decline in gas station sales, retail spending increased 0.8 percent.

However, although a few industries saw notable upticks in sales, one sector got hit particularly hard: Electronics and appliance stores.

“[W]here the report was undisputedly weak, and where many were hoping for a boost but did not get it, was in the higher margin electronics and appliance stores,” Zero Hedge notes, “which dropped -0.6% in December, down big from the 2.3% increase in November, and further weakness for those hoping that December saw a surge in spending over gadgets.”

“In other words, more bad news for the makers of iGizmos,” the report adds.

Commerce Department Announces Increase in Retail Sales

Courtesy Zero Hedge

Indeed, considering that their stock has been on the decline for the past few months, this news doesn’t bode well for Apple.

And while we’re on the topic of “declining,” it should be pointed out that despite the December gains, 2012 was the worst year for retail sales growth since the Great Recession supposedly ended more than three years ago.

Retail sales rose just 5.2 percent last year. That’s slower than the 7.9 percent growth in 2011 and 5.6 percent growth in 2010.

Retail sales are also likely to weaken in the first half of 2013 because lawmakers and President Barack Obama allowed a two-year reduction in Social Security payroll taxes to lapse. Most Americans will start seeing less money in their paychecks this month.

A person earning $50,000 a year will see take-home pay shrink by roughly $1,000 in 2013. That’s likely to slow consumer spending and weigh on overall economic growth.

“With retail sales increasing 0.5 percent in December and the biggest drivers of such gain coming from auto parts, furniture, and health & personal care, it really means dealership and furniture stores end-of-year blockbuster sales pushed overall retail sales higher in December,” said Xavier Epps, financial adviser and owner of XNE Financial Advising, LLC.

“The downside is that retailers aren’t going to provide similar sales of this magnitude throughout the months of the 2013 and slower spending should be expected in the months to come due to implementation of higher taxes and the expiration of the payroll tax cut for all U.S. workers.

“In order to have month-over-month positive growth in sales for 2013, retailers are going to have to offer deeper discounts compared to the same period in 2012 that will encourage the consumer to spend. I honestly believe we can expect less and not more retail sale growth in 2013,” he adds.

The retail sales report is the government’s first look at consumer spending, which drives roughly 70 percent of economic activity.

Final Thought: Remember when we talked in September about the importance of core capex [capital expenditures] orders? Yeah, well, that index fell to 4.3 in December, its lowest point since 2009.

So there’s that.

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The AP contributed to this report. Featured images courtesy Getty Images

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Comments (28)

NoMoMrNiceGuy
Posted on January 16, 2013 at 7:33am
Ever been on a roller coaster ? You know that feeling you get right before you lunge down hill at near 90 degrees? Well hang on – here we go – I think I can see the peak – we are close to a major downturn.

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fastfacts
Posted on January 15, 2013 at 3:26pm
OBAMA’S MATH IS SO FAR OFF…

Obama is going to get us farther in debt than ever before, scary.

Here is Fox News Cavuto going through Obama’s bad math, check it out: http://www.thedailycandidate.com/video/2013/jan/obamas_math_problem.html

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trinity76
Posted on January 15, 2013 at 3:04pm
One reason why Apple has likely reduced orders for iPhone 5 parts is because the iPhone 5S is rumored to be announced in March.

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KalanVA
Posted on January 15, 2013 at 2:33pm
“A person earning $50,000 a year will see take-home pay shrink by roughly $1,000 in 2013. That’s likely to slow consumer spending and weigh on overall economic growth.” Wait until this group files their taxes and find out that the Alternative Min Tax may also include them in 2013. Our taxes change on a day by day basis. I am happiest when Congress is in recess. We need a “fair tax” and a third party.

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- cbrown
  Posted on January 15, 2013 at 2:56pm
  The temporary payroll tax holiday had to end. That was a responsible thing to do. We will know at the end of this month if it has any major impact on retail sales. I doubt it
  
  The AMT fix is in the fiscal cliff tax deal.
  
  Report this comment
barber2
Posted on January 15, 2013 at 1:41pm
Of course retail sales are up. The Obama radicals control the MSM.

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sbenard
Posted on January 15, 2013 at 1:38pm
IMPORTANT:
The same Zero Hedge article that detailed this retail sales report also said this:
“As for the bad news: it was all in the Empires State Manfuacturing Index which missed expectations big, and in fact posted a decline from the abysmal November miss, revised to -7.30, and now down to -7.78, the sixth negative print in a row, on expectations of an unchanged print. This was the 5th miss in the series in the last 6 reports, the worst miss in 4 months, and the lowest number in 4 months.” Zero Hedge
And this headline today from the Wall St Journal:
Bloc’s Malaise Hits Germany
The story reported that during the 4th Quarter, Germany’s economy contracted and that Europe’s powerhouse economy is now OFFICIALLY in recession.

But stocks, after being down all night, just got back to flat. The Fed is working overtime to reinflate the bubble economy! And Wall St shrugged off ALL the bad news today (Germany, US manufacturing contraction) in favor of the above retail sales story. This is classic bubble behavior!

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AmericanStrega
Posted on January 15, 2013 at 1:22pm
Of course retail sales are up, because everything costs more.

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- SimpleTruths
  Posted on January 15, 2013 at 2:07pm
  Inflation is next to nothing, nice try but another fail.
  
  Report this comment
- Walkabout
  Posted on January 15, 2013 at 2:59pm
  SimpleTruths
  As an engineer I spend a lot of time measuring things. The CPI is not the only way you can measure. There are other ways you can measure to check on the CPI.
  
  You are in denial.
  
  Report this comment
- Walkabout
  Posted on January 15, 2013 at 3:03pm
  SimpleTruths
  
  “nflation is next to nothing”
  
  I am going to make liberals wish they never said that. I’ll empower people to make their own CPI calculations. When you lie to them in the future they will look at you like the village idi0t that you are.
  
  So live a long time. I want you to have people look at you like the crazy partisan hack that you are.
  
  Report this comment
- Plan B
  Posted on January 15, 2013 at 6:41pm
  This video is “almost” funny.
  
  Report this comment
term limits for congress
Posted on January 15, 2013 at 1:15pm
Luckily, the private sector is doing fine (we’re told).

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jackact
Posted on January 15, 2013 at 1:04pm
The full story?
…..0% job growth in over 4 years.
……. 7.3% unemployment (including those no longer searching for work) ….17% NATIONAL unemployment (about 23 million people out of work)
……..Gasoline national average $3.75 @ gallon…and rising: no drilling here… expect $6@ gallon by 2014
…… 6 trillion deficit charged to Obama…add another 6 trillion for next 4 years
….. 48% of working Americans DO NOT pay income tax.
……US federal reserve busy printing 2 billion a month per Obama
Despite all this the federal government refuses to reduce its size and scope by a single dollar.
Revolution is in order
Our government is now broken permanently.

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- Marine25
  Posted on January 15, 2013 at 2:26pm
  No drilling here, you say. Actually there is plenty of drilling here. But I would like to get one thing straight. When oil is extracted here in America, you know, drill baby drill, that crude oil is sold on the world market. It’s not sent to the U.S. at some discounted rate. Exxon gets richer and richer, your price at the pump does not decline. For American oil production to increase world supplies enough make a significant dent, say 20%, in the price per barrel on the world market, we would have to extract as much oil per year as Canada does. Canada is the second largest oil producer in the world. No matter how cute your gal Sarah Palin is, on this one, she is full of crap. “But it sure sounds like it would work, so can’t we just say it does?” That’s the mantra of the tea party; a bunch of .22 caliber mind in a .357 Magnum world.
  
  Report this comment
- drs1969
  Posted on January 15, 2013 at 3:03pm
  Re; Marine25
  i’m sure Exxon likes useful idiots spouting nonsense for free. That way they can continue overcharging and blame it on us at the same time. They’d rather pump it in Arabia, anyway. Extraction costs are far lower there. Maybe you have PDS.
  
  Report this comment
seek.the.truth
Posted on January 15, 2013 at 1:03pm
Left my retail management job late last year. Retailers are not doing well. They are cutting back on personnel and scheduled payroll hours. 2013 will be worse.

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- Top_Contributor
  Posted on January 15, 2013 at 1:19pm
  Get a job and get off the government dole!
  
  Report this comment
- seek.the.truth
  Posted on January 15, 2013 at 2:17pm
  I LEFT. No one said anything about being unemployed or collecting welfare. What’s the matter stupid contributor? Feeling bored today so you come here to try and pick fights?
  
  Report this comment
- drs1969
  Posted on January 15, 2013 at 3:06pm
  My experience is prices are up more than reported sales(5.2%). Unless retailers are passing on all the increases, people will be losing hours. Inflation is a tax, by another name, to bail out the Big Banks.
  
  Report this comment
Top_Contributor
Posted on January 15, 2013 at 12:58pm
You sheep will never admit anything positive about the economy under Obama. Math doesn’t matter to you. This is why the tea party is marginalized.

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- hatchetjob
  Posted on January 15, 2013 at 1:15pm
  TOP, What is holding you back from admitting that you’re an idiot?
  
  Report this comment
- drs1969
  Posted on January 15, 2013 at 3:09pm
  Long term unemployed is the highest since WW2. Labor force participation rate is the lowest in over 30 years.
  Obama voters were raised on Welfare, so they never looked for a job.
  
  Report this comment
- patriotsofworkingamerica
  Posted on January 16, 2013 at 9:00am
  Hey Top_Contributor,
  Go crawl back under your rock you Progressive schill.
  
  Report this comment
RoDogg
Posted on January 15, 2013 at 12:55pm
I want to see a report with ALL government money subtracted!

I specifically HATE seeing GM auto sales numbers because I am always seeing BRAND NEW chevy cop cars and border patrol etc.

The only people I know buying nice new appliances or still affording their home etc…. work for the government.

The private sector has been shrinking while the public sector growing and we have record people on unemployment etc…. they take EBT cards everywhere …. etc… etc…

seriously … this report and most reports in general mean nothing to me without government money being subtracted.

then again …. I’m never going to be able to wrap my head around public employees paying taxes when their income is from taxes??

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- term limits for congress
  Posted on January 15, 2013 at 1:13pm
  … and paying union dues with taxes, which goes back to the politicians as campaign contributions. Send our taxes directly to the politicians and cut out the middle men.
  
  Report this comment
- drs1969
  Posted on January 15, 2013 at 3:16pm
  Their Counterfeiter-in-Chief, Ben Bernanke, is giving them over $1 Trillion a year to spend on those cars and payrolls. This is how they are taking over the economy, Soviet style. It inflates all numbers to make our ‘Dear Leader’ look good. This is the way the of the Soviets.
  Subtract the $1.2 Trill. he injected last year and the GDP would be around 7.5% smaller.
  
  Report this comment
alexegz30
Posted on January 15, 2013 at 12:52pm
So the focus of electronic sales nationwide is Apple? Did Microsoft disappear from the electronics market? How about Dell or HP? Apple has cell phones and a tablet, but so does microsoft, google, and plenty of others. If there is a drop in electronics, I would like to see across the board what’s happening, not just focus on one company.

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