The CNNMoney headline reads: Gasoline prices drag down retail sales. So I thought we were going to get some facts about how high gas prices cause consumers to spend more of their income on gas, due to it's relative price insensitivity, and less income on other goods for which the demand is more price sensitive. It would be a nice simple illustration of own-price and cross-price elasticities that I can add to my arsenal of examples for econ 101. But then I read the story...
Gasoline prices dragged down consumer spending for the third month in a row, according to a government report out Monday.
Overall retail sales in June fell 0.5% in the month, according to a Commerce Department report. The decline came as many were expecting growth, with economists surveyed by Briefing.com expecting growth of 0.2%.
Gas prices declined steadily throughout the month, hitting a low of $3.41 a gallon at the end of the month. Prices hadn't been that low since the beginning of January. Gasoline stations' sales fell 1.8% during June.
via money.cnn.com
Huh?
Gas prices fell and retail sales fell?
And gas sales fell?
How then did gas prices drag down retail sales?
What am I missing?
Did other prices rise? If so, then I might argue that the price of other goods dragged gas sales (since gas prices fell AND gas sales fell).
