U.S Retail Sales Fall; Producer Price Drops 0.1% in September

Last month, United States retail sales experienced a 0.3 percent decline, a figure that is more than the initial forecast of 0.1 percent. One month after retail sales had some momentum the September pullback signaled that consumers are taking a respite likely due to the upcoming holiday shopping season next month.

Here are some of the specific numbers in the wide variety of sectors of the consumer economy:

  • Sales at clothing retailers decreased 1.2 percent
  • Sporting goods sales fell 0.1 percent
  • Sales at appliance and electronics stores increased 3.4 percent
  • Sales of building materials and garden equipment declined 1.1 percent
  • Receipts at auto dealerships shrunk 0.8 percent

Economists purported that the decline in gasoline sales can be attributed to the reduction in oil prices, which can also be a positive for the overall economy. With drops close to every element of the economy, particularly in gas prices, consumers could potentially have additional income for discretionary spending in the next couple of months.

clothing shopping

On a broader economic picture, financial analysts see a lot of positive momentum from the recent plethora of data.

“Looking ahead, favorable indicators include continued robust manufacturing activity and growth in investment spending, gradually improving employment conditions with modest income growth, and stabilization and potential modest gains in housing with recent improvements in builder confidence,” Emily Kolinski Morris, chief economist at Ford Motor Co. said to reporters on an Oct. 1 conference call, according to Bloomberg News. “These incoming indicators, coupled with the support of policy backdrop, should continue to provide positive momentum for the economy here in the second half.”

Producer prices take a dip

The U.S. Department of Labor released September’s Producer Price Index (PPI) on Wednesday, and it reported a reading of -0.1 percent for the first time in more than a year because of declining gas prices.

The core PPI, meanwhile, which omits food and energy, remained flat at zero percent last month.

Producer prices have soared 1.6 percent in the year through September, which is bothering policymakers at the Federal Reserve because they fear that inflation is still sitting below its two percent target rate. This could very well prompt the U.S. central bank to delay any intentions of hiking interest rates.

Charles Evans, president of the Federal Reserve Bank of Chicago, warned at the annual conference of the National Council on Teacher Retirement that the Fed should tread carefully before making any cavalier decision to start raising rates. He believes raising rates too prematurely can have a negative effect on the economy.

“I believe that the biggest risk we face today is prematurely engineering restrictive monetary conditions,” said Evans, notes the Los Angeles Times. “I favor delaying liftoff until I am more certain that we have sufficient momentum in place toward our policy goals.”

He added, however, that he is content with raising rates “sooner than later” but with inflation running below two percent it’s unlikely prices will begin to soar, says Evans. “Indeed, many Fed critics have been voicing this concern since 2009, and it hasn’t even come close to happening,” Evans stated.