Wednesday, February 15, 2012

US Retail Sales

The price of gasoline is making the evening news again. Yesterday, NBC made a big deal about rising gasoline prices. The national average pump price rose to $3.40 a gallon during the week of February 1 from a recent low of $3.22 during the week of February 21. Last year, it peaked at $3.96 in mid-May, and seems to be heading there based on the jump in gasoline futures prices in recent days. The evening news segment didn’t report that natural gas prices are trading near record lows. Instead, the next story after the one about rising gasoline prices was about the tensions in the Persian Gulf between American and Iranian naval forces. The point of the story was that it wouldn’t take much for some shots to get fired over there, which could then send gasoline prices soaring over here.

That sort of anxiety might be creeping into the Consumer Sentiment Index, which edged down during mid-February to 72.5 from 75.0 during January. On the other hand, Debbie reports that Bloomberg’s Consumer Comfort Index increased for the fifth week in the past six weeks.

Retail sales of gasoline service stations did climb by 1.4% during January to $539.4 billion (saar), but they’ve been around that level for the past year. They currently account for 11% of retail sales. Americans have been responding to high gasoline prices by driving less. The Federal Highway Administration reports that vehicle miles traveled in the US fell to 2.96 trillion in the 12 months through November, the lowest since May 2009. This series actually peaked at a record 3.04 trillion miles back during November 2007. The 52-week average of gasoline usage fell in early February and the lowest since February 2004.

While consumers are driving less, they continue to shop. Retail sales rose to a fresh record high in January. The 0.4% m/m increase was weaker than expected, but matched consensus expectations of a 0.7% increase excluding autos, which declined 1.1%. That didn’t jibe with the unit auto sales data showing a 4.6% increase during the month.

Nevertheless, inflation-adjusted retail sales, excluding building materials (which are included in residential investment in the GDP accounts), rose to a new cyclical high during January and the best reading since February 2008. The three-month percent change in the three-month average of real retail sales excluding building materials rose 7.4% (saar), suggesting a solid increase in the consumer spending on goods in the GDP accounts for the first quarter.

The question is why are Americans driving less? Unemployment and underemployment remain high, and reduce the number of people driving to work. More likely, in my opinion, is that Americans are aging along with the Baby Boomers, and older people tend to drive less than younger ones. (More for subscribers.)

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