We'd Rather Buy iPhones and Video Games Than Clothes or Gas: Retail Sales Data

We'd Rather Buy iPhones and Video Games Than Clothes or Gas Though Americans aren't buying homes, clothes, gas, or furniture, we haven't stopped spending on gadgets, according to Tuesday's retail sales report from the Department of Commerce.

Overall retail sales rose 0.6% in October, beating analysts' estimates. Meanwhile, electronics and appliance store sales jumped 3.7%, the highest increase in two years. Last time there was a spike like that was November 2009, which benefited from a jolt from Black Friday and holiday shopping at the low-point of the recession.

October is typically a slow month for retail, though data shows that people didn't hold back on treating themselves to the most expensive products this year. According to Scott Hoyt, senior director of consumer economics at Moody's Analytics, many analysts credit the release of the iPhone 4S on Oct. 14 with a large fraction of the electronics sales increase. The new iPhone sold 4 million units in its first weekend, an all-time record for a phone.

"[The iPhone 4S] is probably responsible for the growth in the appliance and electronics store segment," Hoyt says of Tuesday's report. "Despite high unemployment and only modest job growth, and in spite of extraordinarily low levels of consumer confidence, there is some budgetary freedom and pent up demand. That's starting to matter."

As the report does not track who is shopping, it's impossible to know how much of the increase was from spending by affluent Americans. Still, the overall trend favoring electronics over other types of products certainly can't be pinned on a few iPhone junkies. Sales at clothing stores, gas stations, and home furnishing stores actually declined in October, according to the report.

Sean Murphy, senior analyst at the Consumer Electronics Association, says that in the past few years, gadgets and computers once considered inessential have become "the new normal."

"These products have gone from being toys to necessities," he explains. New releases every few months improve products and encourage consumers to spend, making each version better integrated in our daily lives.

"There's become a symbiotic relationship between the industry and consumers," Murphy explains. "People's relationships with the devices evolve. Behavior patterns change even as technology changes."

And unlike other tools such as cars (which also showed a surprising rise in October's numbers), people tend to replace electronics like smart-phones frequently.

"Even as the country is tightening its belt, consumer electronics sales continue to do well," Murphy says. "This speaks volumes about the industry."

Economists predict that with these kind of numbers, holiday shopping numbers will also be on par with last year -- in other words, good. Electronics may well hold center stage. Call of Duty: Modern Warfare 3 has already broken sales records for the most units of a video game sold on opening day. The Kindle Fire, released Monday, is expected to sell up to 5 million units before the year's end.

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Fred

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November 16 2011 at 11:01 PM Report abuse rate up rate down Reply
warrenbent

Whenever I read comments such as most of the responses to this article, I'm dumbfounded how many people (nearly all) get their information from an article like this instead of reading the actual report. It's not like it's harder to find the actual report, or more time consuming to read it, or more difficult to understand it.

The article makes a number of factual errors, First, retail sales were up 0,5%, not 0,6%. Granted, it was 0.6% when including revisions to previous months, but it's not real hard to reportthat correctly.

The bigger issue is that electronics did not make up an inordinate portion of the increase. Yes, electronics grew at 3.7%, quite a bit faster than overall sales. But electronics also makes up a relatively small portion of overall retail sales. Grocery store sales and building materials also grew faster than the overall number, but each of these comprises several times the overall level of sales as does electronics. As a result, these were teh true leaders in the overall advance, not electronics

http://www.census.gov/retail/marts/www/marts_current.pdf

Is it realy that hard to just read the report instead of swallowing any misinformation these dolts shove down your throat?

November 16 2011 at 9:31 PM Report abuse -1 rate up rate down Reply
Winnie

I think that's part wrong . Everytime I go to a restaurant, it's wait in line. Don't people eat at home anymore?

November 16 2011 at 5:45 PM Report abuse rate up rate down Reply
1 reply to Winnie's comment
billyjoeobama

I do, I can't stand anyone elses cooking

November 16 2011 at 6:11 PM Report abuse rate up rate down Reply
mebecarl

The biggest misleading lines are "rather buy phones than clothes or gas". This can never happen, unless you are a nudist in San Diego! You can't go out of the house naked to shop for food, and you need gas for your car to run.

November 16 2011 at 5:40 PM Report abuse rate up rate down Reply
Weshusky

It just goes to show how stupid and gullible the American public really is.

November 16 2011 at 4:00 PM Report abuse +4 rate up rate down Reply
1 reply to Weshusky's comment
snoopytb1

Yea! They spend all their welfare and unemployment checks on this crap. Thanks to Mr O.

November 16 2011 at 5:53 PM Report abuse +2 rate up rate down Reply
2 replies to snoopytb1's comment
savemycountry911

More true than you think. I worked in a highschool and the teens on welfare had expensive things.

November 16 2011 at 10:01 PM Report abuse rate up rate down
savemycountry911

Hi evan.

November 16 2011 at 10:58 PM Report abuse rate up rate down
tenaclark

I guess some people need I-Phones for business, but I see no need otherwise.

People don't eat at home any longer either. There is not a restaurant in Houston, Texas that doesn't have a full parking lot at lunch or at the end of the day.

November 16 2011 at 3:43 PM Report abuse +4 rate up rate down Reply
Trudy Marie

I can't keep up with the monthly bills and groceries let alone think about an I-Phone....who does these surveys anyhow?? VERIZON? Gimme a break!

November 16 2011 at 3:35 PM Report abuse +5 rate up rate down Reply
1 reply to Trudy Marie's comment
warrenbent

The retail sales report is done by the US Cesus Bureau.

As the report indicates, your individual spending has very little impact.

November 16 2011 at 9:05 PM Report abuse rate up rate down Reply
zzyxx

well...it is food and gas that we all spend on each day.......can/t do without either. and the electric cars....they require more fossil fuels to make and charge them then a gasoline engine would consume....you also have the problem with toxins once the batteries die and are disposed of.......their range on a charge is so short they are not practical for the average person. .....................should have done your homework on that one n

November 16 2011 at 3:09 PM Report abuse -2 rate up rate down Reply
Norina

BTW--Gas? We hardly spend on gas anymore as we have a Prius.

November 16 2011 at 2:26 PM Report abuse +3 rate up rate down Reply
Norina

You need an iphone (or Droid) because, as a recent study stated, if you don't have one, you are judged as "behind the times." Then, you buy the video games for your kids--or they won't fit in with their friends.

While there are alternatives for buying new clothes or home goods, there isn't a substitute for either current phones or video games.

November 16 2011 at 2:24 PM Report abuse -2 rate up rate down Reply
1 reply to Norina's comment
tenaclark

The problem is we are living in a status symbol world where some people feel the need to impress their neighbor.

The children in our family play softball, water ski, snow ski, run track and participate in other outdoor activities. They don't have time to play the latest video game because they are too busy having healthy fun.

November 16 2011 at 3:50 PM Report abuse +3 rate up rate down Reply
2 replies to tenaclark's comment
billyjoeobama

You really want to impress your neighbor ? .............MOVE OUT !

November 16 2011 at 6:22 PM Report abuse -1 rate up rate down
billyjoeobama

Liberal stooges don't believe in an active lifestyle, unless it includes walking to the mailbox or corner to hook up with the dope dealers or hookers. "Hey son let's go collect your old lady's "who da baby daddy's check and go party" ..'Whaat it is dawg !!!!!

November 16 2011 at 6:28 PM Report abuse -1 rate up rate down