Release Explanation: This report measures the value of sales at the retail level, a very important set of figures that make up a large percentage of the consumer spending numbers. Retail sales are the measure of the total sales of goods and services by retail stores. Retail Sales is an important measure of consumer spending and inflationary pressures. Serviced based economies rely on the strength of the consumer to keep things moving along, this therefore impacts PCE and CPI, the Inflationary reports. A currency will be impacted by this report over time as it reveals the strength of the public in their ability, or desire, to spend. Steady increases in retail sales apply significant inflationary pressures to consumer prices. With retail trade being the foremost indicator for consumer spending, this figure is extremely important in understanding the economy.
Trade Desk Thoughts: Rising unemployment and falling asset values in homes and 401k plans led consumers to cut back on spending again in December, according to figures released today from the Commerce Department. Retail sales fell 2.7%, more than twice the forecast. It was the sixth straight monthly decline in sales, the longest pullback on record. Core sales declined 3.1%, also more than twice the forecast. It was the biggest drop in sales ex-autos since records began in 1992.
Trade Desk Thoughts: Rising unemployment and falling asset values in homes and 401k plans led consumers to cut back on spending again in December, according to figures released today from the Commerce Department. Retail sales fell 2.7%, more than twice the forecast. It was the sixth straight monthly decline in sales, the longest pullback on record. Core sales declined 3.1%, also more than twice the forecast. It was the biggest drop in sales ex-autos since records began in 1992.
"It's obvious that consumers will continue to retrench as the job market weakens," said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "We're likely to see a wave retail restructurings and bankruptcies this year, which will cause further loan losses at the banks."
For 2008, sales declined 0.1%, the first yearly decline on record. Sales declines were led by gasoline, which were partially offset by falling prices. However, yesterday's report on the Trade balance showed that oil imports in volume terms declined by over 23% in November as the economy slowed. The drop at grocery stores was the biggest since April 2002 and the decrease at restaurants was the largest since the terrorist attacks in September 2001.
In a separate report from the Bureau of Labor Statistics, the U.S. Import Price Index declined 4.2% in December following decreases in each of the previous four months. Export prices also fell for the fifth consecutive month, declining 2.3% in December after a 3.4% drop the previous month.
Forex Technical Reaction: S&P futures were trading near their lows of the session prior to the report, down 11.5 points (-1.32%). Futures plunged to a 17 point (-1.93%) decline afterwards. The dollar continued its momentum against the higher-yielding currencies and was just above 89 on the yen.