Cash for Clunkers Hurts, Doesn't Kill September Retail

Retail sales took a step back in September, and the bulk of the losses came in the car market due to the end of Cash for Clunkers. Does today's news invalidate the auto revitalization program? Hardly. The drop doesn't exactly erase my doubts about C4C, but it does suggest that something I feared -- encouraging families to spend tens of thousands in August would discourage them from spending on other things in September -- isn't happening.

Some key facts:

1) The 1.5% drop in retail sales is pretty much entirely explained by the 10.4 percent month-to-month plunge in auto sales.

2) Non-auto sales grew, but slightly less than in August.

3) Consecutive months of non-auto, non-gas growth suggest that the consumer economy is on the right track, even if it's not positive year-over-year.

[via Real Time Economics]