Not surprisingly, retail sales jumped in August thanks in large part to the increased auto sales from the government’s “Cash for Clunkers” program:
Retail sales surged in August as consumers swapped their old cars for new under the government’s “cash for clunkers” program, and spent more on gasoline at convenience stores.
The Commerce Department reported Tuesday that retail sales bounded higher by a seasonally adjusted 2.7 percent last month, surpassing economists’ expectations of 1.9 percent. It was the largest monthly increase since January 2006.
Sales at automobile dealerships rose 11.9 percent from a month earlier, reflecting the popularity of the taxpayer-financed auto purchase program, which offered consumers rebates of $3,500 and $4,500 to trade in their older cars and trucks for more fuel-efficient models.
But the figures, while encouraging, may not translate into real growth.
(…)
Some economists said the reported increases could reflect problems with the way the government adjusts the sales figures to account for seasonal factors, such as the Labor Day holiday.
“I don’t really think there is enough here to suggest a strong change in story,” said Scott Hoyt, senior director of consumer economics at Moody’s Economy.com. “We need to see what happens when we get next months data, and do we get revisions or reversals.”
Nonetheless, there are some encouraging signs as this chart indicates:
It appears the cliff diving is over and the official recession probably ended in July. But retail sales are still far below the pre-recession level, and the recovery will probably be sluggish.
As with all things, we shall see.
