retail sales

OIl, consumer spending, and the Recession

Back in April, I crunched retail and oil price numbers and concluded that the price of oil was responsible for over half of the changes in real retail spending in the last two years. As the price of oil continued to shoot higher, on June 2, after examining the role of China's hoarding in its burgeoning strategic oil reserve, and the hoarding going on at sea by oil companies and speculators, I wrote that

April retail sales: Consumers stay zombified

The Census Bureau reported this morning that:

Retail trade sales were down 0.4 percent (±0.7%)* from March 2009 and 11.4 percent (±0.7%) below last year. Gasoline stations sales were down 36.4 percent (±1.5%) from April 2008 and motor vehicle and parts dealers sales were down 20.7 percent (±2.3%) from last year.

This drop was not anticipated by most observers.

As with March, it appears that almost all of the decline in consumer sales vs. a year ago is cars and gas. (Update: Ex-gas and cars, YoY retail sales are flat to -0.1%).

Last month's decline failed to take into account the early Easter from last year vs. this year. Thus we should probably average the two months' data, for a decline of -.9% YoY.

The Continuing(!) Effect of the Oil Shock on the Recession

The effects of the Oil Shock that took prices to $100+/barrel in 2007-2008 are gone now, aren't they?

Before the Black September market/401k meltdown, aside from housing and finance, the chief drag on Main Street was the shock of Oil prices rising relentlessly from $55 dollars/barrel in January 2007 to $147/barrel in July 2008. This was the 4th such Oil Shock, the previous shocks all causing recessions in 1973-74, 1980, and 1990. Last summer people weren't talking about how their retirement accounts had been cut in half, or how unemployment was skyrocketing, they were talking about how it took $50 or $100 to fill up their cars or SUVs. Suddenly mass transit and carpooling were popular again.

(Update) March poor Retail Sales explained: not adjusted for Easter!

Earlier this week the Census Bureau reported a nasty decline in March retail sales. The report was jarring precisely because private sources of data -- same store sales, mall traffic, car sales -- all had indicated firmness.

And look at what this abrupt decline has wrought: Prof. James Hamilton at econbrowser calls March's poor retail sales "a particularly discouraging development". Prof. Krugman says that "things are still getting worse."

Now let's consider this little nugget: here is the March monthly and early April weekly update from Shoppertrak:

March retail sales: Processing ...

This morning both March PPI and retail sales were released. The PPI was more negative than anticipated, suggesting a negative CPI tomorrow (Deflation is Here!).

Retail sales are more interesting. I've written several pieces about consumers coming back from the grave. At first blush, the March numbers seem to contradict what we saw from Shoppertrak re mall sales; and also same store sales, and to a very limited extent, auto sales -- all of which showed some improvement.

Retail sales were off -9.4% YoY. Ex-auto they were off ~6.0% YoY. A closer look suggests (1) Easter falling one week later in April may have much to do with the decline; and (2) almost all of the decline is in auto and gasoline sales.

Total retail sales from a year ago fell from 380.2 to 344.4. Almost all of that decline was autos, down from 67.0 to 49.7; and gasoline, down from 42.3 to 27.9.

Just how historic is the Consumer retrenchment?

Although retail sales data reported last week surprised by not being as awful as expected, nevertheless the plunge in consumer spending since "Black September" has been dramatic.

Just how dramatic? Let's compare the cliff-diving plunge in retail sales at the end of 2008 with past retrenchments.
Below is a graph of real retail sales (i.e., adjusted for inflation) since the original, now-discontinued series was started in 1947 (in red) with the more modern version since its inception in 1990 (in blue):

Neutron Bomb over Wall Street?

One of the heretical thoughts I continue to hold is that the "slow motion bust" that we are living through, may not proceed to destroy the entire economy like a nuclear bomb. Rather, like a neutron bomb over Wall Street, it might destroy the financial sector but leave most of the economic infrastructure in place. If it is a worthy goal that the doctrine of "Profits are privatized, losses are socialized" must cease, then it may be an absolute tonic if several financial enterprises thought "too big to fail", nevertheless do.

A noteworthy graph from Yahoo finance demonstrates that the "neutron bomb" scenario indeed may be unfurling. The graph below covers the last 3 years for the S & P 500 (red) and compares it with the financial sector as represented by the Financial SPDR (blue), starting from a baseline (0%) of 5 years ago:

Just how ^(*^&)&^_) stupid do they think we are?

Okay so either I am an absolute idiot, or haven't had enough coffee this morning, but for the life of me I can't make any sense of today's retail sales data...especially the part about autos.

We see that "car dealers suffered a 2.8% drop in sales in April, adding to the .5% drop in March".

So what is wrong with that you ask. Well try this...

Retail Sales Fall Sharply in December & February

Retail sales fall sharply in December and February; price-adjusted sales now down sharply in 4 of the last 5 months as recession deepens

Today’s Census report of nominal retail sales receipts for February also revises down sharply their earlier estimate for nominal sales in December and January. Price-adjusted retail sales have now fallen sharply in four of the past five months and even nominal receipts are back to the lowest levels since last August.

Retail Sales fall behind CPI

This surely eliminates any remaining credibility for those debt industry salesmen and politicians who still deny a recession is underway.

Price adjusted retail sales down Feb. '08