Full text of Business Trends : Retail Trade

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E AFTER 9: 15 A. M.

Prepared by the Research Department of the
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FEDERAL RESERVE BANK OF ClE\lELAND -

s er vi n g

the Fourth Feder a I. Res e ..r v!e District .

RETAIL TRADE
Reports on retail trade are mainly favorable
for the second quarter of this year, but are
somewhat less favorable for June and early July.
Averaging the second-quarter months of April,
May and June reveals that the level of retail
sales for the recent quarterly period was at least
as good, and perhaps slightly better than the
first quarter showing. This statement holds true
for retail sales as a whole and for department
store sales in particular. It is true for the country as a whole and for this Federal Reserve District, and it holds good even after allowance is
made for expected seasonal variations between
the first and second quarters of the year.
Taken by itself, June was a month of less favorable sales for important branches of retail trade
than either April or May. Seasonally adjusted
department store sales were lower in June than
in May, by about 3 percent for the country as a
whole, and by about 5 percent in this Federal
Reserve District. No improvement has been noted
yet in July. Unusually warm weather during early
summer may possibly have been a partial factor
in the lower sales performance by department
stores in June and early July. Sales of automobiles,

however, have been maintained at ,.very' high
levels up to the present time. · Taking-'
)tetail
trade together, the June total of ·saleB ' did · not
differ significantly frotn the May totat~

all

It is not enough to· know·. that trade during
the second quarter on the whole , was asf_ good or
better than first-quarter trade. The ·next question is: how good •or bad is .such a level of :trade
volume? For the year 1949 up to, the· present;
total retail sales as shown by Department of Commerce figures have been approximately the: same
in dollar volume a~ they were during -~the c6rresponding period a year ago, when sales were
high but not yet at their ·peak. ·As · compa~ed
with the third quarter of last ·year when ·r etail
sales reached their all-time peak, the a v~rage pa.ce
of retail sales so far this year, 'allowing' for ·seasonal differences, has been down by about 2 to
3 percent.
As usual the grand total figure is less ·sensitive
to change than its constituent parts. While -total
retail sales have been slipping slightly below last
fall's peak, sales so far this year by gro~ery
stores and other food stores, which account

for

Broadcast by Addison T. Cutler, Trade Economist, Federal Reserve Bank of Cleveland, over WGAR,
Cleveland, with Jim Martin, Morning News Editor, WGAR, Saturday, July 23, at 9:15 a.m.


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Federal Reserve Bank of St. Louis

about one-fourth of the grand total, have been
~at an average level about one percent higher
than the third quarter of last year, although a
slight decline in food sales began to develop in
April. Sales by automobile dealers so far this
year, accounting for about one-seventh of total
retail sales, have been running an average of 8
percent better than during the third quarter of
last year.
Now if important sections of retail trade such
as food and autos are holding their own or better,
while the total of retail sales is down from last
fall, it follows that other types of retail establishments must have taken a greater percentage
drop in sales than would be indicated by t~e .
total figures. This is borne out by the trade data
published -by the Departl]:lent of Commerce. Thus,
if sales by auto dealers and food stores are ex-·
eluded from the total, then sales so far this year
by all other types -of retailers, combined, show
a drop from the peak third-quarter level of last
year amounting to 6 to 7 percent on the average.
This figure is also on a seasonally adjusted basis,
and it includes nearly forty listed types of retail
outlets, ranging from department stores through
florists; jewelry stores, and restaurants.
The drop from the peak for the departmentstore branch of trade is 7 percent, as shown by
Federal Reserve da.ta. That is, department store
sales so far this year have been averaging about
7 percent below the level reached during the third
quarter of 1948, even after allowing _for seasonal
differences.-An additional allowance for the fact
that prices have gone down somewhat since last
fall would indicate that the physical volume of
department store sales has declined less than the
dollar volume, but that . physical volume is also
down slightly from last fall's level.
Within the department stores, sales of the
different lin~s of goods have varied considerably,

even after allowing for seasonal differences. Sales
of women's hosiery and of men's furnishings
have been practically at the same level as last
fall. Sales of women's coats and suits have fallen
close to 10 percent from last year's third-quarter
levels. Furniture sales are down appreciably, and
sales of major household appliances are approximately 40 percent below those of early last fall.
This loss in appliance sales, however, occurred
late last fall and early this year. For the past
three or four months, appliance sales have been
picking up.
It should be explained that the figures just
mentioned on seasonally adjusted sales of the
different lines of department-store goods are based
on a study of reports from this Federal Reserve
District only. I~ mai~ outline, howeve~, the
· Fourth District's experience in this particular
respect is probably similar to_the national picture.
· When the essential facts on retail trade which
h~ve just been µientioned are considered in the
light of the present moderate recession in general
business, three conclusions appear to be justified:
· First, the trade situation at present is not a
major factor in pulling ·down business, even
though the earlier dip in retail sales was probably
connected with the onset of the business recession.
Second, the steadying of trade in the second
quarter of this year., while helpful, has not
brought about a general business upturn. A
marked pickup in trade might turn the -trick, but
latest reports show no indication of such development.
Third, retail trade is, of course, strongly subject
to influences from the surrounding economy.
Hence, in the light of the present downward direction of industrial production and employment,
retailers in the immediate future will be doing
well to hold close to present levels of trade
volume.

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