Highlights
Retail sales in August made a sizeable comeback-boosted by cash-for-clunkers and higher gasoline prices. But other components were healthy in general. Overall retail sales jumped 2.7 percent in August, following a revised 0.2 percent drop the previous month. The gain in August was above market expectation for a 2.0 percent surge. Government incentives jacked up auto sales a huge 10.6 percent for the latest month. Excluding motor vehicles, retail sales rebounded 1.1 percent, following a revised 0.5 percent fall in July. The market had forecast a 0.4 percent gain for August. As expected, gasoline sales spiked 5.1 percent on higher prices. Even so, excluding motor vehicles and gasoline, retail sales posted a 0.6 percent advance, following a 0.4 percent decrease the previous month.

Components outside of autos and gasoline were unexpectedly healthy other than housing or construction related components. Consumers apparently are a little more optimistic about the economy as they boosted sales in a variety of categories, including general merchandise, up 1.6 percent for August; electronics & appliances, up 1.1 percent; and food & beverage stores, up 0.5 percent. The key laggards were furniture & home furnishings, down 1.6 percent, and building materials & garden equipment & supplies, down 1.2 percent.

Overall retail sales on a year-ago basis in August were down 5.3 percent, improving from down 8.5 percent in July. Excluding motor vehicles, the year-on-year rate rose to down 6.2 percent in August from down 8.6 percent the month before.

The August retail sales numbers show the consumer surprisingly willing to open up wallets. Part of this likely is the fact that sales had fallen so low that any notable pickup in sales would look good percentage-wise. Nonetheless, the numbers will be encouraging for retailers and also will boost estimates for third quarter GDP growth. Equities should be up on today's news while interest rates should firm.

Market Consensus Before Announcement
Retail sales slipped 0.1 percent in July, following a revised 0.8 percent boost the month before. Excluding motor vehicles, retail sales dropped 0.6 percent, following a revised 0.5 percent rise in June. Weakness was led by gasoline and sales excluding motor vehicles and gasoline, retail sales fell 0.4 percent. Looking ahead, sales should get a boost from autos and gasoline. Already, we have seen a 25.4 percent monthly surge in unit new motor vehicle sales for August and gasoline prices also firmed for the month.

2009 Release Schedule

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