Consumers Still Squeezed

By Andrew Paparozzi
In April 15, 2008

Are economic conditions beginning to stabilize? Total retail sales and food services edged 0.2 % higher in March. Given all the existing gloom and doom, that retail spending showed an up-tick seemed to surprise many observers. But as we caution repeatedly at NAPL, don’t get too caught up in month-to-month movements.

On a year-over-year basis, total sales were up 2.0% in March—the slowest pace since November 2003. However, when we exclude sales at gasoline service stations, the increase narrows sharply to 0.3%. While even year-over-year results can bounce around, there’s no getting around the fact that economic conditions have turned decidedly weaker in recent months. A 3-month moving average of year-over-year changes in sales excluding gasoline stations was down to a 1.1% increase in March—substantially slower than the range of 3.1% to 5.8% gains witnessed during 2007. And remember, if we adjust for prices, these data would be even weaker. With energy and food prices continuing to move significantly higher, there doesn’t seem to be much relief on the way.

Consumers are not the only ones being squeezed. Higher energy prices (up 20.4% at the producer level for the 12 months ended March) and other costs are squeezing margins in many industries. Do the retail data point to some stabilization in the economy? If they do, it’s not readily apparent. What is apparent is that, while the wheels haven’t come off the economy, we’re still in for a pretty bumpy ride.

Joseph Vincenzino

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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