Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=210785
Story Retrieval Date: 3/17/2014 9:55:52 AM CST
Margaret Sutherlin/ MEDILL
U.S. retail sales dropped 0.3 percent from September to October because of weakening same store sales and Superstorm Sandy. Auto retailers were among the hardest hit, and also stand to gain from the storm as East Coast residents start to file insurance claims for cars lost in the storm.
Superstorm deals a blow to October retail sales
U.S. retail sales fell in October for the first time in four months, thanks to Superstorm Sandy and softening same-store sales in the weeks prior to the hurricane. Some industries did get a boost from the storm, but the decline remained a bit of a blow right before the start of the holiday shopping season.
The 0.3 percent decrease in retail sales, to $411.6 billion, was slightly bigger than than the 0.2 percent dip economists surveyed by Bloomberg were predicting. That slippage tended to take some of the shine off the stronger-than-expected 1.3 percent increase seen in September.
“Sandy exacerbated the giveback in October to much stronger-than-expected sales in September,” said Diane Swonk, chief economist at Mesirow Financial, in a Wednesday morning blog post. “As consumers drain wealth via insurance claims and savings to make repairs [after Sandy], we will see a fairly sharp rebound in sales, but probably not until December.”
The decline showed up across almost all major retail categories. Auto sales took a large hit because of the storm, falling 1.5 percent from September. Grocery and gasoline spending did spike however,as East Coasters stockpiled in preparation for the storm.
Economists don’t expect retail sales to be much stronger in the coming months, even as repairs from Sandy get underway, and they anticipate a change in how much people spend during the holidays.
While New York City and East Coast residents may not have holiday shopping at the top of their priority list, the cleanup will help to boost retail sales in some categories. But Marquette University economist Abdur Chowdhury said holiday spending would have been affected by stagnant income levels in any case.
“We’ve seen growing consumer confidence and the housing market and prices are doing well, but the income growth hasn’t been at the same rate,” said Chowdhury. “I think this means our holiday shopping sales won’t be as great an increase as we thought.”