For Immediate Release
June 23, 2004
LANSING — More than half of Michigan retailers indicate that record-high
gasoline prices will cut into their profits by raising costs or lowering
sales, according to the monthly Michigan Retail Index survey conducted
by the Michigan Retailers Association (MRA) and Federal Reserve Bank
of Chicago.
When asked to choose the primary effect of spiraling gas prices, 26
percent said higher costs and 25 percent said lower sales. Only 10 percent
said higher retail prices, and a far-smaller 5 percent expected the
result would be a boost in sales.
Gas prices above the $2 mark, together with extremely wet weather,
may be the reason more Michigan retailers saw sales fall off in May
after the best four months since 2000.
The Index found that 35 percent of retailers increased sales in May
over the same month last year, while 16 percent reported as-good sales
and 49 percent recorded declines. The results create a seasonally adjusted
performance index of 39.2, down from 56.7 in April and the lowest month
since March 2003.
"In April we said the big question is whether gas prices above
$2 a gallon will cut into retail sales this summer. May’s figures
might have given us the answer," said Larry Meyer, MRA chairman
and CEO. "Add record rainfall to that equation and the answer is
reduced sales."
Retailers’ projections for the next three months fell slightly
in May. Sixty-three percent forecast better sales for June–August
over the same period last year, while 12 percent project as-good sales
and 25 percent expect declines. The results create a seasonally adjusted
outlook index of 69.2, down from 72.3 in April and virtually the same
as May 2003.
The Michigan Retailers Association is the unified voice of retailing
in Michigan and the nation’s largest state trade association of
general merchandise retailers. MRA’s nearly 6,000 retail business
members operate more than 13,000 stores across the state.
Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.
