Will November’s High Sales Fall Over the Cliff?
As consumer confidence was at a 4-year high, it’s not a surprise that retail sales in November also rose. While some sectors — one in particular — did not help the sales rise as much, core retail sales rose 0.5 percent after a flat October. However, if auto, gasoline, and construction supply sales are included, sales rose only 0.3 percent, which is lower than economists had expected.
Auto sales were up, as previously predicted for November, with a 1.4 percent increase. Some of the increase may be attributed to Hurricane Sandy necessitating the purchase of new cars for many along the East Coast. Ford (NYSE:F) posted a sales increase of 15 percent, and GM (NYSE:GM) ended up the biggest auto seller of the month in the U.S., with growth in its Cadillac, Buick, and GMC brands, and just a small 0.03 percent year-on-year decline in Chevrolet. Despite the rising auto sales, though, the gasoline that fuels those cars was down a whopping 4 percent — the biggest monthly drop since the end of 2008.
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Other increases in sales were seen in electronics, with a 2.5 percent increase, and in mail-order and online sales, with a 3 percent increase. These numbers may have also been increased as a result of Sandy, but are also an obvious result of the holiday shopping season getting underway toward the latter half of the month.
Of course, with the presidential election over, and with the New Year rapidly approaching, Americans are increasingly focusing (and worrying) about the fiscal cliff, which is now taking prominence in political discussions. The term refers to tax increases and spending cuts that will automatically go into effect in 2013 if Congress can’t find an alternative solution by year’s end. Allowing the budgetary changes to go into effect, as is, could derail the economic recovery and potentially send the U.S. back into recession. Many Americans may choose to moderate their holiday spending in favor of saving for a potential downturn, while sales are likely to take an even greater hit should the fiscal cliff actually go into effect.