Consumers Feeling Impact of Higher Taxes

May 14, 2013
Slower growth trend lies ahead in retail sales.

Total Retail Sales, including food, automobiles and gasoline dropped 2.64% from March to April (data from the US Census Bureau Monthly Retail Trade Report).  The decline was steeper-than-normal but milder than last year, so some year-over-year rate-of-change rise occurred.  The rate-of-change improvement looks good, but the underlying trend is one of slower growth in this segment of the economy. 

We use a smoothing technique called a three-month moving total (3MMT) to offset any single month noise in the data.  The seasonal decline in the 3MMT from December to March was milder than normal at -7.7% (good news), but it was steeper than the seasonal decline in each of the last two years (a worrisome sign).  The 2.9% seasonal rise in April is milder than normal and the mildest since 2009 (we were still in the Great Recession then). 

The monthly and seasonal numbers indicate that the consumer is indeed feeling the impact of higher taxes, despite the job growth.  This may be at odds over some recent headlines, but the facts speak for themselves.

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