- The Washington Times - Thursday, February 13, 2003

WASHINGTON, Feb. 13 (UPI) — The Commerce Department said Thursday U.S. retail sales sank 0.9 percent during the first month of 2003 to $306.6 billion after climbing 1.2 percent in December.

Most economists on Wall Street were expecting retail sales to fall by 0.6 percent during the month.

The Commerce Department also said excluding automobiles, retail sales posted their biggest gain since September 2000, jumping 1.3 percent after rising a revised 0.2 percent in December, which the government originally reported as no change during the month.

Economists were expecting sales excluding autos to rise 0.5 percent.

Retail sales, which rose 3.4 percent during all of 2002, measure the total receipts at stores that sell durable and nondurable goods.

Consumer spending accounts for two-thirds of the economy, so if you know what consumers are up to, you'll have a pretty good handle on where the economy is headed. Needless to say, that's a big advantage for investors.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation.

Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. This balance was achieved through much of the nineties. For this reason alone, investors in the stock and bond markets enjoyed huge gains during the bull market of the 1990s.

Retail sales growth did slow down in tandem with the equity market in 2000 and 2001.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers.

Perhaps auto sales are especially strong or apparel sales are showing exceptional weakness. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.

The latest reading from the Commerce Department showed sales of automobiles and parts sank 7.5 percent after jumping 7.9 percent in December and rising 2.6 percent in November.

Sales at general merchandise stores, which include department stores, rose 0.6 percent after rising 0.3 percent in December and falling 0.9 percent in November.

Sales at clothing and accessory stores improved 0.3 percent after rising 0.8 percent a month earlier and falling 0.8 percent in November.

Sales at electronics and appliance stores fell 1.4 percent after rising 0.4 percent a month earlier. Sales at catalogue companies and Internet merchants declined 0.4 percent after rising 1.3 percent in December.

Sales at food and beverage stores improved 2.6 percent after falling 1.3 percent a month earlier and rising 1 percent in November. Sales at restaurants and drinking places rose 1.1 percent after rising 2 percent in December and 1.1 percent in November.

The report also showed sales of building materials surged 2.9 percent after falling 1.8 percent in December. Sales at sporting goods, hobby, book and music outlets rose 0.3 percent after falling 0.9 percent a month earlier.

Sales at gasoline service stations surged 2.7 percent after rising 1.7 percent in December. the government said.

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