Financial Crisis Freezes Consumer Spending in October, According to NRF

As expected, consumers went into hibernation as the full scope of the financial crisis took hold in October. According to the National Retail Federation, retail industry sales for October (which exclude automobiles, gas stations, and restaurants) decreased 0.5 percent seasonally adjusted from September while increasing 1.3 percent unadjusted year-over-year.*
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Washington - As expected, consumers went into hibernation as the full scope of the financial crisis took hold in October. According to the National Retail Federation, retail industry sales for October (which exclude automobiles, gas stations, and restaurants) decreased 0.5 percent seasonally adjusted from September while increasing 1.3 percent unadjusted year-over-year.*

October retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) decreased 3.3 percent unadjusted over last year and 2.8 percent seasonally adjusted from September. The discrepancy in U.S. Commerce Department and NRF's retail industry sales numbers is based on major declines in the autos category, where sales dropped 25.9 percent from the same period a year ago and fell 6.2 percent month-to-month.

“Consumers went into hibernation in October while concerns about the economy were at a peak,” said NRF Chief Economist Rosalind Wells. “As economic uncertainty went from bad to worse, shoppers pulled back on everything but the basics to weather the storm.“

Sales were weak across most retail categories as consumers continue to focus on staple purchases. Sales at furniture and home furnishing stores decreased 13.2 percent year-over-year while decreasing 2.5 percent month-to-month. Electronics and appliance stores were down 5.7 percent from October 2007 and decreased 2.3 percent from the prior month. Clothing and clothing accessories stores fell 3.0 percent from the same period a year ago while decreasing 1.4 percent from September.

In spite of the challenging sales environment, there were a few bright spots in October. Health and personal care stores increased a strong 4.2 percent year-over-year and rose 0.4 percent from September. General merchandise stores, which include discounters, were up 3.5 percent from October 2007 but down 0.4 percent from the prior month.

NRF continues to forecast meager holiday sales growth of 2.2 percent and defines the holiday season as retail industry sales in November and December.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2007 sales of $4.5 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com

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*All month-to-month comparisons are seasonally adjusted; year-over-year comparisons are unadjusted.

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