June 2012 Retail Sales decreased, by -0.5%, and this month one cannot blame just falling gas prices. Autos & Parts alone dropped -0.6% while auto dealers, part of Autos & Parts, declined -0.7%. Minus autos & parts, retail sales also decreased, -0.4%. This is the 3rd month in a row retail sales have declined. June Retail sales are up 3.8% from the same time last year. Retail sales are reported by dollars, not by volume, so dropping prices often reports as a decline in sales.
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Retail sales correlates to personal consumption, which is about 70% of GDP growth. Yet GDP has inflation removed from it’s numbers. This is why Wall Street jumps on these retail sales figures. Below is the graph of retail sales in real dollars, or adjusted for inflation, so one gets a sense of volume versus price increases. This graph only goes to May. While we do not have the quarterly figures yet, this report implies personal consumption will be weak for Q2 2012 GDP.
(Emphasis in the original.) Oh, and GDP growth is going to be terrible.
Jennifer Rubin spells out what this means for Barack Obama:
The political media’s failure to grasp the import of the economic news is as embarrassing as Obama’s economic policy failure. Both expect the public can be bamboozled by rhetoric. Perhaps the media will catch on that what Romney says in July about what Obama is accusing him of is irrelevant. Right now they are acting as if the real world and the prospect of a literal recession (which would be two quarters of negative growth) is. As we approach zero percent growth, so do Obama’s chances of reelection. The rest is just smoke and mirrors.