How Strong Are Retail Sales ?
Look at the raw Retail sales numbers, and you might think we were in a full blown recovery. Month over month for August, it was up +2.7% versus consensus expectations of a 1.9% increase.
The source? A huge 10.6% jump in motor vehicle sales, due to the $3 billion dollar, government sponsored, cash for Cash-for-Clunkers program, as well as a slate of state sales tax holidays.
Back out autos, and sales were up 0.7% MoM — still better than consensus expectations of +0.4%. August was the best month since February 09, and ends a five-month string of flat-to-negative results.
David Rosenberg of Gluskin Sheff also notes that seasonal factors used by Commerce were the most aggressive in five years and helped give the data bit of a boost — in fact, one-quarter of that 2.7% gain came just from the more generous-than-usual seasonal factor.
Rosie notes very specific sector winners and losers.
The sectors posting good results were …
• Clothing, which we’ve highlighted before, is on a firming trend — up 2.3% Mom and gaining in three of the past four months.
• Electronics did well too — rising 1.1% but that followed a 1.0% decline in July. No evidence of a positive pattern here.
• Food/beverage stores had their best sales month, up 0.5%, since January.
• Drug stores also had their best month since March — up 0.4% last month and up in three of the past four months.
• Sports/music/book stores had their best tally since March 2007 with a huge 2.3% run-up last month.
• One of the big upside surprises was in general merchandise (mostly department stores) which posted a 1.6% MoM surge — the best performance since March 2007 too.
The laggards in the report included….
• Restaurants — up 0.3% and this followed two months of decline. The trend in restaurant sales is clearly down.
• E-tailing was flat — web-based sales have been stagnant or down now for six of the past seven months.
• The real weak parts of the report were in the housing-related areas, even though home sales have clearly picked up off the floor.
• Furniture stores saw a 0.2% sales loss — sales have been down now for six months running.
• Building materials posted a huge 1.2% decline, the third large falloff in a row.
So far, September seems to be starting off well. Year over year trends are negative 1.9%, but the monthly changes are positive.
Its not all wine and roses, as Discount stores are the leaders, reflecting frugality on the part of value driven consumers. Spending remains restrained in terms of discretionary purchases.
One wonders what retail sales would look like in the absence of government stimulus, tax holidays, and special bailout programs.
September 17th, 2009 at 7:44 am
American consumers will stop consuming when you take their credit cards from their cold, dead hands.
And the bond market is telling us… that the Central bank owns a lot of bonds.
September 17th, 2009 at 8:05 am
http://www.bloomberg.com/apps/news?pid=20601110&sid=aXHsFeEaL3GQ
OT – couldn’t help it – “California Will Investigate Rating Agencies Attorney General Says” – Bloomberg
Jerry Brown is after them as well – Let’s see if that helps…
September 17th, 2009 at 8:15 am
It appears that the segments of the economy that pertain to everyday life, back to school clothing, books, sports equipment, plus grocery stores did well. Housing related, furniture, and restaurants did not. LIfe goes on, kids go back to school, adults need replacement clothing and household goods.
The people that I know who were unemployed are still unemployed and drawing down their savings to live. No one I know is getting any job offers, or raises if they are employed. Some that are employed are getting the bad news that their portion of the health insurance is going to be higher this year.
The stock market wealth effect is helping to mitigate the damage to some people’s portfolios, 401ks, etc., which actually is putting money back into people’s pockets, even if they don’t spend it. This helps with consumer confidence as the statements show monthly gains, not losses. People feel good when their stocks go up, and bad when they go down.
September 17th, 2009 at 8:24 am
What we see depends mainly on what we look for – JOHN LUBBOCK
In his book “The Black Swan” Nassim Taleb says, “We have seen how good we are at narrating backwards, at inventing stories that convince us we understand the past. In spite of the empirical record we continue to project into the future as if we were good at it, using tools and methods that exclude the rare events.” Funny isn’t it, since the big, rare, unpredictable events are precisely what shape the world. Events like the automobile and the World Wars, the internet and the Beatles.
http://viewpointsofacommoditytrader.com/419/suckers-for-prediction/
September 17th, 2009 at 8:44 am
In August I walked through a mall the night before the start of public schools. It was dead! No last minute shoe shoppers or new jeans to buy. No activity at all!
However, the last two weekends the pseudo – sports store was busy and the funky salad restaurant my wife likes so much was busy. I know for a fact that six months ago these places were empty.
Lay-offs at my company have halted and we have even hired a few annalist. Profits suck, capital expenditures are zero but the mood is that the worst is over.
September 17th, 2009 at 8:46 am
no wonder my spam is down, hmmmmmm
September 17th, 2009 at 8:48 am
Well, with government sponsorship of “everything”…continued claims are 6.23 million. First time claims, with the inevitable revision upward next week are 550k.
Same ole, same ole….what we need is more good old taxpayer indebtedness…maybe we should import milk from Europe?
September 17th, 2009 at 8:51 am
Seems like a committed Fed can make us levitate. Perhaps we’re standing on a wall of ultrasound:
http://www.reuters.com/article/newsOne/idUSTRE58F1KP20090916
September 17th, 2009 at 9:09 am
word from around my tony town in NJ 30 minutes outside NYC. pre-school enrollment is down and the word on the street is its due to the economy. the fortune 300 i work for will only hire people that are senior with very specific skill sets and only after signoff by the CIO. any additional resources needed if absolutely required will be staffed out of our india facility. basically we aren’t hiring anyone and we’re a company of 45,000. on the flip side we appear to be done with the layoffs, for now at least.
September 17th, 2009 at 9:20 am
After a dismal summer on LI, I saw a regain of activity leading up to labor day and back to school.
I wouldn’t guarantee a return to the good old days however, right now we are back to ghost town.
September 17th, 2009 at 9:29 am
http://quotingthecrisis.tumblr.com/post/189343745/think4yourself-savingpaper-inothernews-tom
Surprise me….
September 17th, 2009 at 10:17 am
BR says: “Year over year trends are negative 1.9%”
Then how come Miller Park stadium district (Milwaukee County and surrounding counties) sales tax revenues “are now running 10.4% behind a year ago.”
http://www.jsonline.com/news/milwaukee/56679151.html
Meanwhile, Wisconsin sales tax revenues are down 4.3% y-o-y.
http://www.jsonline.com/news/wisconsin/59190447.html
Either Milwaukee and Wisconsin are MUCH worse than the national average, or something is very wrong with the given numbers.
Hmmm?
September 17th, 2009 at 10:20 am
When you back out clunkers & seasonality you’re right at the small forecast increase.
September 17th, 2009 at 10:51 am
Attention irresponsible boomer generation, are you furrowing your hoary brows about the prospect for a cushy undeserved retirement after a life of thoughtless and selfish extravagance because our economy’s green shoots are not sprouting fast enough for you?
Afraid that a tapped out consumer and government budget may pose some risk to your plan to avoid having to abandon the style of life to which you have been accustomed, and settle for a significantly more modest retirement, one funded by real earnings ex bubblized asset sales? (In other words, reality for the rest of us).
You have little to worry about so long as you keep making use of your career seniority in private industry and government and continue to cast your geriatric vote in ever growing numbers, as you have in previous years, to get the kind of leadership and legislation that suits your generation’s needs – never mind what the rest of us might need.
As long as YOUR elected leaders run the show, the bubble machine will be oiled and gassed up and you’ll still find plenty of opportunities to milk the earnings future generations of productive workers to enable you continue the spending party you’ve been enjoying since the 80s until your death – with plenty of change to spare to keep you all in diapers and Viagra.
For those of you who don’t or can’t expect to leave a few crumbs to posterity, doubtless the vast majority, you may depart with the comforting knowledge that your children and grandchildren will always have a place on the donkey mill wheel of our new global economy as modern day sharecroppers paid in company scrip issued by the corporate plutocracy you helped to secure in power; fettered by your generation’s unprecedented yet entirely avoidable debts but lacking the viable economic means by which to reduce them in order to regain their freedom.
Then again, maybe freedom is somewhat overrated? Perhaps Jefferson et al. didn’t have the foresight to realize we would eventually outgrow the need for it by the time the vastly wiser, more cultivated and tech-savvy boomer generation came to take our nation’s reigns of power.
September 17th, 2009 at 11:06 am
Barry: Thanks for posting this. It does indeed show once again that the economy in growing. I see many posters here and elsewhere who refuse to believe the numbers.
Also today, we see more excellent economic numbers. We’re setting up for a nice economic boom in the upcoming months.
September 17th, 2009 at 11:17 am
One wonders what retail sales would look like in the absence of government stimulus, tax holidays, and special bailout programs.
That’s like asking what Hollywood would look like without plastic surgeons
September 17th, 2009 at 11:41 am
@Common Man
That’s priceless. I’m going to plagiarize that for use with friends and family if you don’t mind.
September 17th, 2009 at 11:56 am
Had Enough .. I hope you had a good childhood with the world the previous generation built with the system .. imo we outsourced to much manufacturing to bring the rest of world into the capitalism* system (and profit .. and put unions in their place)
thread in general .. imo the market is rising and testing direction flows for the coming herded exit point .. to cash out and buy up real assets** with whats left in those accounts .. but not at a loss (unless it must be) .. and to the nonsense naysayers .. didn’t (or reminder) we have a situation in the last year of locked out devestment in those said accounts
HW .. no crash wished .. but no fleecing either
digg Huffpost – stumble reddit del.ico.us ShareThisRead More
* good link: Corporatists vs. Capitalists
http://www.huffingtonpost.com/cenk-uygur/corporatists-vs-capitalis_b_288718.html
one for Kudlow:
“Capitalists believe in choice, free markets and competition. Corporatists believe in the opposite. They don’t want any competition at all.”
** homes, lots, prime business real estate, farms
September 17th, 2009 at 12:39 pm
Had Enough
Since starting my first full time job (48 hours/week: 75 cents/hour) at age 12 I have been employed virtually continually. I worked my way through college and graduate school as student loans, at that time, were limited to a couple of bucks for beer. I also helped register Black voters in East Texas at a time the Klan was still dynamiting Black churches. I protested a useless War that claimed the lives of several of my High School friends before they were old enough to vote or drink legally.
I have continually opposed those who would prostrate this Nation for their own selfish gains. While actively opposing these forces I noted the lack of participation by the younger generation. Those who had the most to lose did the least to prevent it.
I was imbued with frugalness from those who went through the Great Depression and World War II thus I have no debts save a small mortgage that I could write a check for. Now I am in a senior position of authority with its perks and six figure compensation. I do have retirement savings that are more than sufficient for a level of comfort that I have not regularly afforded myself. I have all of this because I have earned it. I will enjoy what I have earned without the least guilt. To those who blame others for inheriting a few pebbles in the road of life I can only say shove it.
September 17th, 2009 at 2:00 pm
Olephart – Congratulations on your hard work and accomplishments!
Had Enough – Why are you so bitter?
My thoughts….everything has its season, and our season of excess may be over. That’s okay with me. We’ll save more, spend less, and enjoy simple things like Sunday dinner with family and recreation like yard work and playing catch. Quaint? Yes. Boring? No. Work as recreation? Yes….thanks to a Benedicting monk I knew years ago. Bless you Fr. Joachim!!!
For 15 years I’ve marveled how we (consumers) have spent our way into oblivion. We keep raising the bar on our wants, converting them into needs, and then raising the bar again. It has to stop somewhere.
Don’t get me wrong….I’m a capitalist. But I don’t need 452 ways to buy a plasma TV. I can help regulate supply simply with my demand. I don’t need a government to do this for me.
September 17th, 2009 at 2:46 pm
@olephart
My apologies for grossly generalizing. Given that your generation occupied nearly every position of authority in government and business – not the least of which the very financial institutions in question – during the formation and result of this current global financial mess, including its supposed “solution”, not to mention the largest single cohort of voters ever in US history and largest and wealthiest group ever of the consuming public, it follows that most of your generation must have been just like you paint yourself: frugal, hardworking and prudent when it came time to stand and be counted. It clearly stands to reason that the boomers have not had an especially preponderant effect on these negative outcomes.
“Let’s not point fingers,” say our pragmatic boomer leaders, as they are astute enough to know that all fingers will point to them and their friends.
I encourage you to enjoy your fairly acquired wealth and use your authority as you see fit. From what I have learned about you, I am sure you have already unselfishly put both to work in order to help fix the sorry situation we are all facing, even though I’m sure neither you had (nor the organization you derive your authority and wealth from had) no part in creating. Let those suffer fairly “who had the most to lose” for shirking their responsibility by not “participating” in the political process when they had the chance according to your account, including the millions of children who were in kindergarten and elementary school when IB firms and the government decided to turn the securities markets into casino tables and de-industrialize the economy that your parent’s generation sweated in factories to build for you.
My only criticism: perhaps it would have helped if you could have done a bit more to warn those apathetic kids you allude to about their responsibility to take action while you were out on one of those patriotic voter drives.
September 17th, 2009 at 8:38 pm
Had Enough
Each generation has its own set of problems. Some of these problems are more acute than others. Each generation also has its share of villains and heroes. How many teenagers have dropped out of school despite all the warnings? How many twentysomethings ran up their new credit cards without thinking? How many thirtysomethings bought more house than they could afford hoping for appreciation and easy money? How many fortysomethings were mortgage brokers writing loans they knew would explode just to pocket their commissions? How many fiftysomethings knew the securities their firms were dealing in were junk and took millions in bonuses? How many sixtysomethings have spent all they’ve earned and not saved a dime? Age is not wisdom and youth is no excuse for conclusions based on inexperience. Gracious apology accepted.
September 18th, 2009 at 12:54 am
@Had Enough Says: September 17th, 2009 at 11:41 am
not a problem, go ahead
September 19th, 2009 at 6:03 am
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