California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

Thinking that it can get no worse, specifically after U.S. retail sales fell worse than expected
by falling 1.2% in September, the biggest drop in three years and the third decline in a row,
retail sales suffered a record decline in October.

Retail sales were $363.7 billion, a decrease of 2.8 percent from the previous month and 4.1
percent below October 2007.

The Commerce Department reported that this was the largest decline in the history of the
current methodology used to calculate sales since its change in 1992.

But the devil is in the details.  Two categories, auto sales and gas prices were the two
culprits that reduced the total.  Given that gas prices have been so high, the free falling
price of the commodity has had a direct bearing on retail sales.   Thus excluding the 5.5
drop in auto sales and gas prices, retail sales were only down 0.5 percent for the month. 

“Lower gas prices and sizable discounts at retailers helped to slightly improve consumers
assessments of current economic conditions, while higher unemployment and a deepening
recession dimmed their expectations for future gains," identified in the report. One might
have hoped that because gasoline was down in price, it might have freed up money to be
spent on other items. But given the unknowns of the job market consumers did not make
that move.

I am Tim Johnson and this has been the California Business Minute.