'Cash for Clunkers' helped July retail sales, but not enough
U.S. Census Bureau data released today shows that sales of retail and food services items fell 0.1 percent in July compared to June, and 8.3 percent compared to July 2008. Results were helped by a 2.4 percent month-over-month gain in auto sales, as the Cash for Clunkers program drove activity at car dealerships. Excluding motor vehicle-related numbers, total sales fell 0.6 percent, compared to an expected consensus gain of 0.8 percent. Building materials posted the largest drop in sales from the previous, falling 2.1 percent, along with gasoline stations.
David Rosenberg, Chief Economist and Strategist at Gluskin Sheff, said that the data was "simply awful" in a client note obtained by DailyFinance. "We can have all the inventory building in the world but it can't last without a revival in final sales... If there was ever going to be a month where retail sales were going to rise, this was it -- due to the 'successful' Cash-for-Clunkers program. The program may be a 'success' but all the government is really doing is taking away from future spending."