Is the Retail Sales Pullback a Blip or New Trend?

This morning’s Census Bureau Retail Sales numbers were as popular on Wall Street as the Laker loss was in Los Angeles. The unexpected 1.2% drop in spending was the largest and first since September 2009. Although sales are still up 7.4% year-over-year, that number is artificially inflated by higher gas prices.

Looking at the charts below, we can see the monthly stats are trending down. Therefore, today’s government retail data will surely raise deep suspicions on Wall Street as to whether the consumer will support the necessary transition to the unsubsidized phase of the economic recovery.

When scrolling down the line items in the retail report, the glaring loser was Building Materials & Garden Equipment with a 9.3% drop. If we back out Gasoline and Building Materials, sales actually rose .1%.

So, all is not lost. There are still some reasons the markets may fare better than the bears expect.