Jan Retail Sales up a Weak 0.2%: Consumers Throw in the Towel on Autos, -2.4%

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The first quarter isn't off to a huge start. Retail sales rose a mere 0.2% following a sizable negative revision in Dec.

In January retail sales rose 0.2% from a 1.6% decline in December revised lower from an initial report of -1.2%.

Econoday attempted to spin this as positive news.

Retail sales managed only a 0.2 percent headline gain in January after plunging a downward revised 1.6 percent in December. But when excluding autos, where sales were very weak in January, the latest month shows a very strong 0.9 percent gain that hits the top of Econoday's consensus range. The report's two core readings -- less autos & gas and the control group -- also show outstanding gains, of 1.2 and 1.1 percent respectively that reverse tremendous weakness in December at revised losses at 1.6 percent and 2.3 percent.

General merchandise is as good of place as any to find a reliable gauge to these unusual extremes and at a 0.8 percent January gain vs a 1.5 percent December loss probably puts in a nutshell the underlying message: deep and unusual weakness during the holiday season followed by a respectable bounce back. Nonstore retailers, where e-commerce is tracked, shows the same theme, at plus 2.6 percent in January vs severe contraction of minus 5.0 percent in December.

Vast swings are apparent through all readings which will have the Census Bureau double checking their adjustments. But it's not all about adjustments. The government shutdown started late last year and proved a negative not only for consumer confidence readings which plunged but for consumer spending as well. How much has the consumer bounced back? Judging by January's results the word "somewhat" comes to mind. But advance readings for February have not been favorable whether continued and deep weakness for auto sales or slowing growth in Redbook's same-store sales tally.

For the first-quarter GDP outlook, today's report is positive as it shows acceleration. For the Federal Reserve, the report is right in line with their move toward caution, waiting to see how events are unfolding.

Not Positive At All

This advance report was not positive in any way, shape, or form. Consumers have thrown in the towel on both housing and autos. The Census Department report shows motor vehicles and parts fell 2.4%.

Year-over year sales are up less than 2%. Real retail sales are flirting with zero.

Motor vehicle sales are flirting with negative numbers year-over-year.

Econoday cited the government shutdown. The BEA, however, estimated the GDP impact as 0.1%.

Perhaps there is a bounce, but it should be increasingly clear the entire global economy is slowing rapidly.

Mike "Mish" Shedlock

Comments (13)
No. 1-8
ReadyKilowatt
ReadyKilowatt

Cars are too expensive and too complicated. Building fuel-efficient vehicles with $2.00 gasoline isn't helping either. Add to that the technological advances are being over-hyped as "any day now" and people who might want a gadget car are waiting.

Realist
Realist

I am looking forward to when most vehicles are autonomous, but since I believe that is more than one decade away, it would not shape my buying habits today. I do not think that the vast majority of consumers are holding off purchasing a vehicle because they are waiting for a truly driverless car.

Regarding slowing retail sales, that is just another sign of a slowing economy. Expect 2% gdp growth this year, and probably a little less next year.

KidHorn
KidHorn

I would wait until 2021 before buying a car, if possible. Who knows what laws the democrats might pass if they gain control of the gov't. An SUV tax? New gas taxes?

ksdude
ksdude

Good. Im tired of mediocre $40k pickups.

JonSellers
JonSellers

Guy just opened a new Harley dealership in my burg. I live 40 minutes south of Daytona Beach and its Bike Week, so good timing on his part. I ride a 12 year old Street Glide, and those new bikes sure are pretty. Maybe it's time for something new.

But here's the thing: they don't put a price tag on the bike's anymore (at least this dealership). And they'll take your existing bike as a trade-in. They wouldn't do that 10 years ago. The salesman said that I throw out a number and he takes it to the sales manager, we haggle from there. That shows me that Harley-Davidson has lost all pricing power. The sales guy mentioned that $20k would be an expected starting point for discussions. I'm thinking $15k + something extraordinary for my old bike.

Mish
Mish

Editor

The "any day now" claim is bullshit - I gave timelines about 10 years ago and the only the only direction they moved is lower. No one that I know of predicted earlier. And no one ever said "any day"

truthseeker
truthseeker

Well Mish that didn’t work so if taxes have to be raised why not tax consumption rather than investment with a VAT-value added tax on everything except food and prescription drugs so those who consume the most, the wealthy, will pay the highest amount of taxes. This should hurt growth the least in my opinion.

Six000mileyear
Six000mileyear

It's my fault. The last pair of sneakers I bought was 18 months ago.