Retail sales were flat in August compared with July according to the Census Bureau even though many individual retailers had previously reported decent back-to-school sales numbers. Core retail sales, which exclude autos and gas, rose 0.1 percent. Hurricane Irene may have played a role, boosting sales at grocery and home improvement stores, which rose 0.3 and 0.2 percent, respectively, while depressing sales elsewhere. Year-over-year, total sales were up 7.2 percent while core sales increased 5.4 percent - healthy gains though a deceleration from July's performance.
The reasons behind last month's slowdown are not hard to find: meager job growth, further home price declines and a collapse in consumer confidence. The International Council of Shopping Centers expects holiday sales - excluding restaurants, grocery stores, auto dealers and gas stations - to rise 3 percent this year, down from the 4.1 percent gain notched last year. The recent sales data are disappointing not only to retailers and shopping center owners but for the broader economy since consumer spending accounts for 70 percent of GDP. With global growth decelerating, spending by U.S. consumers, if it can be maintained even at ordinary levels, would help inoculate the economy against a near-term recession.