United States retail sales data through February show that while the last three months have been positive they have not in fact been inspiring at all. We see that the volatility in total sales was driven by the motor vehicle and motor vehicle parts market during August, September, and October of 2009. I attribute this to Cash for Clunkers, and interestingly, the net increase during those three months is not as large as many might think due to the pull-back in September motor vehicle sales. For four months now, motor vehicle sales have not been a positive force for total sales. A chart is provided below.

From this data we can see why national accounts consumption growth was positive in the fourth quarter of 2009 as Retail Sales growth in October and November were quite strong. However, unless March Retail sales growth comes in stronger than 10 percent growth over that of February, 2010 quarter 1 national accounts consumption growth will be lower than in 2009 fourth quarter. This supports our forecast that 2010 quarter one national accounts consumption growth will be lower (at 1.3 percent annualized) than the 1.7 percent rate experienced during the fourth quarter of 2009. In fact, our forecast may be optimistic.