Retailers, consumers and prices
Check Out Line: Billions can’t rescue retail sales
The Commerce Department said on Tuesday that total sales at U.S. retailers rose a less-than-expected 0.1 percent in June. Economists polled by Reuters had forecast total retail sales to rise 0.4 percent in June, following a 0.8 percent gain in May.
Part of the weaker-than-expected results were due to falling demand for cars. Auto and auto parts sales fell 3.3 percent in June — their worst month since February 2006. But even excluding autos, retail sales rose 0.8 in June, which was below the consensus estimate of 1.0 percent. Excluding autos, building supplies and gasoline, retail sales rose 0.4 percent in June.
Economists had expected government tax rebate checks to give a bigger boost to retail sales in June, despite the weak overall U.S. economy, as shoppers had excess cash to spend. But last week, major retail chains, like J.C. Penney, Target and Gap, released their June sales results and many did not see a rebate boost. Penney said it might have received a “modest” sales lift from the checks but any benefit would be “short lived.”
So where did the billions of rebate cash go?
Well, Wal-Mart got a chunk. Its June U.S same-store sales rose at their highest level in years as traffic in its stores jumped. The retailer had offered to cash tax rebate checks for free.
Surging gasoline prices likely gobbled up an even bigger chuck of the rebate dollars. The Commerce Department said gasoline station sales rose 4.6 percent in June as motorists faced higher prices at the pump. Over the past year, gasoline station sales have jumped 24.5 percent to nearly $46 billion last month, on a seasonally adjusted basis.
Charles Grom, a retail analyst with JP Morgan, estimates that every 1 cent increase at the pump, translates into $1.4 billion of lost consumer spending power. “Therefore, the (roughly) $1.00 jump in retail gas year-over-year should more than offset the $106 billion stimulus package,” he wrote in a note last week.
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