Fiscal cliff talk could be reason behind retail sales drop
Published: Thursday, Nov. 15, 2012, 12:01 a.m.
Retail sales fell in October for the first time in three months as superstorm Sandy slammed the brakes on automobile purchases, suggesting spending lost momentum early in the fourth quarter.
Other data on Wednesday showed wholesale prices falling last month for the first time since May, giving the Federal Reserve latitude to maintain its ultra-easy monetary policy stance.
Retail sales dipped 0.3 percent after a 1.3 percent increase in September, the Commerce Department said. Economists had expected sales to fall 0.2 percent.
“Sandy was a drag, but I expect we will see a gain in sales in November,” said Gus Faucher, a senior economist at PNC Financial Services Group in Pittsburgh.
Part of the drop in sales was payback after two straight months of solid gains. It could also be a sign of hesitation among consumers facing the prospect of higher taxes next year.
Even excluding autos, retail sales were flat last month.
Automatic tax increases and government spending cuts will siphon about $600 billion from the economy next year if Congress fails to act to avert them. This so-called fiscal cliff has already eroded business confidence.
“It's imperative that policymakers address the looming fiscal cliff now to give consumers some certainty heading into the holiday shopping season,” said Matthew Shay, president of the National Retail Federation.
Car makers blamed Sandy, the monster storm that lashed the densely populated East Coast and caused up to $50 billion in damage, for the abrupt pullback in sales last month.
Automakers said traffic at East Coast dealerships slowed as residents began to brace for the storm, which hit at the end of the month. Sales tend to build up late in the month, which likely amplified the impact.
Ford Motor Corp. estimated the industry lost sales of 20,000 to 25,000 vehicles, while Toyota put the loss at 30,000.
Separately, the Labor Department said its producer price index slipped 0.2 percent last month, the first decline since May. The index had increased 1.1 percent in September.
Economists had expected prices received by farms, factories and refineries to increase 0.2 percent last month.
Excluding volatile food and energy costs, wholesale prices fell 0.2 percent, the largest drop since October 2010.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Heinz offers Pittsburgh workers a buyout if they are unhappy
- Programs help to nudge unemployment among veterans downward
- Twitter buys data analytics partner
- Google files patent for camera embedded in contact lens
- Tobacco companies make payments under state settlement
- Robinson bakehouse invests time, love in artisan products
- Stocks seesaw, end higher for 2nd day
- Coca-Cola revenue up, but soda sales dip
- Recall puts GM sales under microscope
- How’s your doctor doing? Comparison shop online
- Fed chair might push for stronger regulations