Retail Sales Show Inflation, Not Growth

Wednesday, February 13, 2008 | 10:00 AM

If you ever doubt the significance of the market's relative overbought/sold condition to news, the past two days have been quite instructive. Look at yesterday's ripper on the Buffett muni bond news (the Ambacs (ABK) of the world ended the day lower), and today's response to what was an easily parsed weak Retail Sales data show that its the environmental market conditions the news enters, and not necessarily the news itself, that matters most.

Consider:

"The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $382.9 billion, an increase of 0.3 percent (±0.5%)* from the previous month and 3.9 percent (±0.7%) above January 2007."

Not for price changes means that these are nominal -- not inflation adjusted -- numbers.

Hence, with Gasoline station sales up 23%, and non-store retailers (home oil delivery) up 10.6%, the surprise gains were all energy/inflation related.

I have to  wonder about the boost in demand for cars, considering what we have heard from all the auto makers -- they almost across the board announced weaker sales. I don't know what the Commerce department is looking at, but I cannot figure how its a positive sign for the economy.

Take the Retail Sales EX Inflation (gasoline, food & beverage) and retail sales were DOWN. Excluding inflation, demand at all other retailers last month were unchanged to negative. Economically, speaking, how bullish is that?


Retail_sales_chart_jan_08

Chart courtesy of Barron's Econoday

>


Sources:

ADVANCE MONTHLY SALES FOR RETAIL TRADE AND FOOD SERVICES
JANUARY 2008
WEDNESDAY, FEBRUARY 13, 2008 AT 8:30 A.M. EST
Commerce Dept, Service Sector Statistics Division
http://www.census.gov/svsd/www/retail.html

U.S. Retail Sales Unexpectedly Rose 0.3% in January
Shobhana Chandra
Bloomberg, Feb. 13 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=am.WFHwnr_5s&

Wednesday, February 13, 2008 | 10:00 AM | Permalink | Comments (29) | TrackBack (2)
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» Real Retail Sales Fall to 2003 Levels from The Big Picture
Yesterday, we noted that the market wanted to rally, courtesy of its oversold condition. Dropping nearly 5% in the previous week does that to traders. However, there is no need to tilt against windmills -- be it Buffett's Muni bond grab or yesterday's ... [Read More]

Tracked on Feb 14, 2008 6:34:06 AM

» Pay More, Get Less from The Big Picture
Earlier this week, we noted a deceptive rise in Retail Sales that was driven by price increases, not sales gains. Measured in Real terms, the inflation adjusted change in year over year sales actually dropped back to levels not seen since 2003. The NYT... [Read More]

Tracked on Feb 16, 2008 9:16:51 AM

Comments

today's a big rally day. bull market's back. with strong retail sales like this, it's obvious the economic fundamentals are strong and the crisis is behind us.

at least, that's what TV told me today.

Posted by: crgj | Feb 13, 2008 11:38:13 AM

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