the visible hand

it is the theory which decides what can be observed – einstein

Real Retail Sales – Deconstructed

Posted by ecoshift on June 13, 2008

Just a friendly reminder to read those headlines with a bit of healthy skepticism. I certainly understand the desire to build people’s confidence. I can even understand doing it cynically to minimize the fallout from an bad situation — to avoid panic. But, for those of you who wish to understand what is actually going on this worth a quick scan. There’s a bit of jargon, but I think you’ll get the drift. Click the link:

bizzXceleration: Performance, Value and Profit:
HF Indicators (Sales, Rates, Money, Inflation, Oil, Dollar): Unscheduled Interruption

Real Retail Sales – Deconstructed:

As you’ve no doubt heard Retail Sales was up a whopping 1% MtM ! Glory Alleluia !! And core inflation was flat. Of course sales was up 2.5% YoY, which is really a continuing downturn. And core inflation was 2.3% – higher than the Fed’s upper limit – while overall CPI continued over 4% YoY. BUT this was the month that the rebate checks that we’re going to save us all went out. How is that nominal Retail Sales continues to slow ? This is good news ? Is that all there is ? Take a good look at the rather busy little multi-part chart (sorry – trying to over-compress my dashboards ?). On the top is our standard nominal vs real Retail Sales, the latter being down -1.4% !!

We got curious so we hand-transcribed gas sales, deflated it ourselves and backed it out of retail sales and created some quarterly numbers (another first hear btw :) ). That’s the middle chart which is worth some careful scrutiny. First off since 1992 real Retail Sales and xGas sales have move in tandem – and Gas sales have followed along the cyclic pattern, with a lag. Until the last two quarters when gas has turned into a moon rocket while sales looks like an Acapulco cliff-diver.


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