U.S. Retail Sales: The Stunning Impact of the Financial Crisis

Oct.18.10 | About: SPDR S&P (XRT)

The September 2010 Advance Monthly Sales for Retail Trade and Food Services was released this past week. The seasonally adjusted tally of $367.7 billion is an increase of 0.6 percent (±0.5%) from the previous month, and 7.3 percent (±0.7%) above September 2009.

The chart below shows the complete data series from 1992, when the US Census Bureau began tracking the data. I've highlighted recessions and the approximate range of two major economic episodes that have impacted consumer attitudes. The Tech Crash that began in the spring of 2000 had little impact on consumption. The Financial Crisis of 2008 has had a major impact.

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Here is the same chart with two trendlines added. These are linear regressions computed with the Excel Growth function.

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The green trendline is a regression through the entire data series. The latest sales figure is 7.9% below the green line end point.

The blue line is a regression through the end of 2007 and extrapolated to the present. Thus, the blue line excludes the impact of the Financial Crisis. The latest sales figure is 17.7% below the blue line end point.

We normally evaluate monthly data on a month-over-month or year-over-year basis. The September 0.6% increase over August and 7.3% over September 2009 look encouraging. But a snapshot of the larger historical context illustrates the devastating impact of the Financial Crisis on the US economy.

Disclosure: No position