Commerce Retail Sales Data: Beware Gas Inflation

Yesterday, we looked at the abysmal Same Store Sales data (Retail Sales = Hard Landing ?)

Today, we will get the Commerce Department’s release of retail sales for April at 8:30am. It will look much better than the Retailers data.


Commerce includes the gasoline sales, where prices have spiked to their highest levels since the disruption caused by Katrina. The Commerce Department is measuring not just sales increases, but price inflation also. 

Consensus is for a 0.4% rise; Compare that with the ICSC same-store sales decline of 2.3% — the largest decline dating back to November 1970. The WSJ noted "Outright declines in overall monthly same-store sales figures in the
U.S. have occurred only twice in more than three decades of
record-keeping, and last month’s was by far the sharpest of those."

Thomson Financial tallied 85% of retailers missed expectations.

The ICSC chief
, Michael Niemira, stated: "It’s an ugly picture. The 2.3% decline is a wake-up call that something
fundamental is going on."

Back out gasoline price increases — but not sales increases — and you may very well end up with a different number . . .

The WSJ survey of economists, however, think the worst is over.

"Meanwhile, economists surveyed by said they expect continued weakness in consumer spending but the worst of the economic slowdown has passed. By a ratio of more than 5-to-1, they said the first quarter’s 1.3% growth rate, the weakest in four years, marked the low point in the slowdown, which began last year. However, they expect growth to stay below 3% into early 2008, leaving 2007 on track to have the slowest economic growth since 2003."

Of course, this group has missed noticing nearly every recession over the recent decades until they were nearly over, so take their cheerfulness with a grain of salt . . . 


click for larger graphic




Gas Prices to Boost Retail Sales for April
WSJ, May 11, 2007; Page A2

Economy Is Clawing Back, but Not Much
Economists See Signs of a Rebound in Growth, But 2007 Is Still on Track as Weakest in Years
WSJ, May 10, 2007

Retail-Sales Slide Fuels Concern
WSJ, May 11, 2007; Page A3

April sales weak; most retailers miss
Jennifer Waters
MarketWatch, 3:59 PM ET May 10, 2007

Category: Consumer Spending, Data Analysis, Economy, Energy, Retail

Why Are Stocks Falling?

Yesterday morning, Doug Kass gives us his short list of why stocks ought to take a stumble:

1. The price of gasoline rises to a new high, serving as the functional equivalent of a tax increase for the U.S. consumer.

2. Tech bellwether Cisco’s (CSCO) U.S. business enterprise is weak, and guidance for aggregate sequential revenue growth (of +4%) is disappointing.

3. Other tech companies like Novellus (NVLS) , Nokia (NOK) , SanDisk (SNDK) , Flextronics (FLEX) and Sanmina (SANM) disappointed. The much-heralded release of Vista has failed to meet expectations (and has led to a buildup in PC component parts). DRAM prices fall by nearly 70% to below cash production costs. Electronic Arts (ERTS) , Best Buy (BBY) and Circuit City (CC) guided lower, raising questions about the health of consumer electronics.

4. Multinationals offset end-market weakness in the U.S. by the effect of a weak U.S. dollar. More astonishingly, investors consider the foreign exchange gains as recurring.

5. The multiplier effect of the housing downturn hits many building materials companies like Mohawk Industries (MHK) , Home Depot (HD) and Graco (GGG) whiff, but rumors of private-equity deals bail investors out.

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