Week of October 13, 2006
Cheaper Gas Tugs On Retail Sales
Spending at the nation's retailers fell in September but a big part of that drop was a result of reduced spending at the gas pump. The Census Bureau reported that retail sales fell 0.4 percent in September, following a revised 0.1 percent rise in August. But gasoline station sales fell 9.3 percent in the month compared to August, as gasoline prices fell sharply. Excluding what was spent at gasoline stations, retail sales rose 0.6 percent in the month.
Just about every class of retailer measured by the government report, except for food and beverage stores and auto dealers, saw improved sales in September. Spending at clothing and clothing accessory stores led the way with a 3.0 percent gain, while general merchandise stores, such as department stores, posted a 1.1 percent rise over August.
U.S. Consumer Sentiment Rose In October
U.S. consumer sentiment rose more than expected in October, a preliminary report showed, as consumers' view of both future and current conditions improved. The University of Michigan's preliminary reading on consumer sentiment in October was 92.3, up from September's final reading of 85.4, said sources who saw the subscription-only report.
The survey's index of current conditions jumped to 106.1 on a preliminary basis in October from 96.6 in September, while consumer expectations climbed to 83.4 from 78.2.
Gas Tumbles, But Don't Get Used To It
Gas prices declined an average of nearly 15 cents a gallon in the last two weeks, but are expected to begin rising as the winter approaches, according to the publisher of the national Lundberg Survey. The national average for a gallon of self-service, regular gasoline was $2.28 on the Oct. 6 survey date, compared to $2.42 two weeks earlier - a decline of about 14 cents.
Gas prices declined a whopping 75 cents during the eight weeks between Aug. 11 and Oct. 6. The average gas price on Aug. 11 was $3.03 a gallon. Publisher Trilby Lundberg said gasoline supplies typically are plentiful in the summer when demand is highest.
"We are fast using up the overhang (excess) of gasoline supply. Now some refining capability has to be idled for work projects to shift focus from gasoline to home heating oil - so there will be less gasoline produced," Lundberg told CNN.
"There is a turnaround in the making," she said. As a result of fewer supplies, wholesalers already have begun to pay more for gasoline they distribute to the retailers they serve, she said. She noted that some refineries are still making repairs from last year's devastating Gulf Coast hurricanes. In addition, imports won't be as plentiful, Lundberg said.
Consumer Borrowing Growth Slows In August
The Federal Reserve reported that consumer borrowing rose at an annual rate of 2.6 percent in August, compared with a 4.3 percent rate of increase in July. That was the slowest performance since borrowing actually fell in March. Borrowing in the category that includes credit cards rose at an annual rate of 4.2 percent in August, after a gain of 4.7 percent in July. Total consumer debt rose by $4.99 billion at an annual rate to an all-time high of $2.35 trillion in August.
Realtors: Home Sales Weaker, Prices Lower