Anika R.

Khan, Economist
anika.khan@wachovia.com ● 704-715-0575

January 14, 2009

Retail Sales Nosedived in December with Broad-based Weakness

Retail sales plunged 2.7 percent in December, the sixth consecutive decline and well-below expectations. Revisions
were substantial with November falling 2.1 percent. Core retail sales, which excludes gasoline stations, building
materials and autos, fell 1.4 percent. Holiday sales posted the biggest decline on record falling around 3.5 percent.
Retail Sales’ Surprising December Plunge Holiday Sales Fell Well Below Expectations
• Overall retail sales fell 2.7 percent, the sixth consecutive • Holiday sales fell around 3.5 percent, well below expectations.
decline. Retail sales are now down 7.9 percent, year over year. Sales have been primarily driven by extensive discounting
The biggest drop was in gasoline station sales, which fell 15.9 which is hurting retail profit margins. Holiday items such as
percent. Motor vehicles and furniture continued to decline electronics, clothing, and sporting goods all posted declines.
and are now down 19.7 and 11.9 percent year over year, • The weakness in retail sales means that consumer spending will
respectively. almost certainly continue to decline in the coming quarters.

Retail Sales Holiday Sales

Month-over-Month Percent Change November & December
3.6% 3.6% 10% 10%
3.0% 3.0%
8% 8%
2.4% 2.4%
1.8% 1.8%
6% 6%
1.2% 1.2%
0.6% 0.6% 4% 4%
0.0% 0.0%
-0.6% -0.6% 2% 2%

-1.2% -1.2%
0% 0%
-1.8% -1.8%
-2.4% -2.4%
-2% -2%
-3.0% -3.0%
Retail Sales: Dec @ -2.7%
-3.6% -3.6% -4% -4%
2005 2006 2007 2008 1993 1996 1999 2002 2005 2008

Retail Sales Electronic & Appliance Stores

Ex-Motor Vehicles, Building Materials & Gasoline Stores 3-Month Moving Averages
12.0% 12.0% 30.0% 30.0%
All Series are 3-Month Moving Averages
10.0% 10.0%

8.0% 8.0% 20.0% 20.0%

6.0% 6.0%

4.0% 4.0%
10.0% 10.0%
2.0% 2.0%

0.0% 0.0%
0.0% 0.0%
-2.0% -2.0%

-4.0% -4.0%

-6.0% -6.0% -10.0% -10.0%

Year-over-Year: Dec @ -0.3% Year/Year Percent Change: Dec @ -5.4%

-8.0% -8.0%
3-Month Annualized Rate: Dec @ -8.2% 3-Month Annual Rate: Dec @ -12.5%
-10.0% -10.0% -20.0% -20.0%
96 97 98 99 00 01 02 03 04 05 06 07 08 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

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