Highlights
Retail sales sank again in December and far more than expected, putting to rest any doubt that consumers are retrenching over job losses and fears of unemployment. Even though the plummet was widespread, it was led by a drop in gasoline sales - not taking into account price changes. Overall retail sales fell 2.7 percent in December, after a 2.1 percent decline the month before.

The headline number was worse than the consensus forecast for a 1.2 percent decline. Excluding motor vehicles, retail sales decreased 3.1 percent, after retreating 2.5 percent in November. The December ex-auto drop was below the market expectation for a 1.3 percent decline. Excluding motor vehicles and gasoline, retail sales, however, declined a less scary 1.5 percent after a 0.2 percent dip in November.

The story is getting old - declines were widespread. The largest drop was for gasoline sales-which plummeted 15.9 percent and was price related. The next largest decline was in building materials & garden equipment, down 2.9 percent. Consumers also are cutting back on new clothes and going out to eat - clothing fell 2.5 percent while food services & drinking places dropped 2.2 percent. Incidentally, motor vehicles slipped 0.7 percent.

Overall retail sales on a year-on-year basis in December were down 9.8 percent - compared to down 8.2 percent in November. Excluding motor vehicles, the year-on-year pace slipped to down 6.7 percent from down 4.3 percent in November.

Overall, nearly every major category fell in December. Yes, the consumer is retreating but December's number is not as troubling as the headline number because weakness was led by a cut in gasoline prices. But, no doubt, taking into account broad based declines over several months, consumer spending is depressed. We can expect to see the impact on retailer profits.

Market Consensus Before Announcement
Retail sales are looking ugly at year end. Overall retail sales fell 1.8 percent in November, following a 2.9 percent record drop in October. Overall retail sales have fallen for five consecutive months. In the latest month, weakness was primarily in gasoline and motor vehicle sales which fell 14.7 percent and 2.8 percent, respectively. Excluding motor vehicles, retail sales dropped 1.6 percent in November, after a 2.4 percent pullback the previous month. Excluding motor vehicles and gasoline, retail sales in November made a partial rebound, rising 0.3 percent after slipping 0.7 percent the month before. Looking forward to December numbers, we may or may not see a modest gain in the headline number as a boost in auto sales is likely to be offset in part or more by non-auto sales. Chain store sales have been very disappointing recently and a drop in gasoline prices will likely tug down on service station sales.

Retail sales Consensus Forecast for December 08: -1.2 percent
Range: -2.1 to -0.3 percent

Retail sales excluding motor vehicles Consensus Forecast for December 08: -1.3 percent
Range: -2.6 to -0.4 percent

2009 Release Schedule

Released On: 1/14 2/12 3/12 4/14 5/13 6/11 7/14 8/13 9/15 10/14 11/16 12/11 Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov