June's Retail Rise: Good News or Bad News?

Good news: June's retail numbers are out, and they've beat economists' predictions, rising 0.6 percent. On the other hand, if you discount auto and gas sales, retail actually fell by a thin 0.2 percent margin. But a bump in auto sales is good news because it reflects positively on consumer confidence. And yet, firms that depend on more discretionary spending like restaurants and department stores continue to suffer. How can we make sense of these figures? As always, let's look at some graphs:

The first graph, from Calculated Risk, shows year-over-year change in retail sales, so this gives the best sense of how rotten this year has been compared to the last decade and a half. Economists and the Fed were worried about the drop in consumer spending after 9/11, but this graph shows how the Great Recession has been a different magnitude of devastating for consumer spending.

But what's going on inside that 2008-9 free fall? This second graph demonstrates more acutely the month over month change since the recession started. As you can see, we've applied the breaks since 2008 (knock on wood), but as the economy has begun to pick up in 2009, our acceleration has been inconsistent. This is, however, the first time since mid-2008 that we've seen consecutive month-over-month retail growth.