Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=221330
Story Retrieval Date: 7/31/2014 6:28:40 AM CST
by SHENG Xin
Retail sales surprisingly inched up 0.1 percent in April over March due to robust, broad-based increases in building materials and garden stores, discount stores, apparel, electronics and appliances, according to the Census Bureau.
Economists surveyed by Bloomberg LLC had been expecting a 0.3 percent drop.
Total sales in February through April were up 3. 7 percent from the same period a year ago. Nonstore retailers like online sellers were up 15.4 percent from April 2012, and auto and other motor vehicle dealers were up 8.8 percent.
Gasoline station sales witnessed a large drop, dragging down overall spending.
Bill Hummer, senior vice president and chief economist of Wayne Hummer Investments in Chicago, said this result is not a surprise. “It was more in line with the expected,” Hummer said in an interview.
He said inflation and weak demand will be the continuing hallmarks of 2013. “It will be a sluggish year.”
First Data economists Brian Wesbury and Bob Stein wrote in an online commentary, “This growth is nothing to write a home about, but much better than many analysts were projecting at the beginning of the year.”
Wesbury and Stein said they expect two major themes to play out for consumers. The first is an acceleration in consumer spending growth despite higher taxes, and the second is a transition away from growth in auto sales and toward other areas, such as furniture, appliances and building materials.
Retail sales excluding gas stations were up 0.7 percent in April. Excluding autos, building materials, and gas, core sales rose 0.5 percent.
Chief economist Diane Swonk at Mesirow Financial Holdings Inc. said in an online post that “the biggest obstacle going forward is sequestration, which has been delayed by most government agencies as they are hoping Congress will come up with a fix.”
Swonk said the “the irony” is “the Congress will only fix what it can see, so until the employment losses start hitting key Congressional districts, a fix is not likely.”