- The Washington Times - Tuesday, January 14, 2003

WASHINGTON, Jan. 14 (UPI) — Retail sales rose 1.2 percent in December to $308 billion, the Commerce Department said Tuesday, still leaving the nation's retailers dealing with their worst year since 1992.

Economists on Wall Street were expecting retail sales to rise by 1.5 percent during the month after rising 0.9 percent in November.

The Commerce Department also said excluding automobiles, retail sales were unchanged during the final month of 2002 after rising 0.3 percent in November. Economists were expecting sales excluding autos to rise 0.3 percent.

For all of 2002, retail sales rose 3.4 percent after rising 3.7 percent in 2001. The Commerce Department said 2002 was the weakest year for retail sales since it began keeping comparable records back in 1992. Retail sales measure the total receipts at stores that sell durable and non-durable goods.

Consumer spending accounts for two-thirds of the economy. 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 a 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 jumped 5 percent in December after rising 2.6 percent in November.

Sales at general merchandise stores, which include department stores, rose 0.3 percent last month after falling 0.9 percent in November. Sales at clothing and accessory stores rose 0.8 percent after falling 0.8 percent in November.

Department stores sold 0.3 percent less merchandise. Sales at electronics and appliance stores rose 0.6 percent, while furniture sales were unchanged.

Sales at food and beverage stores fell 1 percent after rising 1 percent during the previous month. Sales at restaurants and drinking places rose 1.1 percent, matching the increase of the previous month.

The report also showed sales of building materials fell 1.8 percent in December, sales at sporting goods, hobby, book and music outlet fell 0.9 percent and sales at gasoline service stations rose 0.7 percent.

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