Despite Media Reports to the Contrary: U.S. Retail Sales Are Actually Increasing, Not Falling
The Commerce Department today reported that: 1) total retail sales in December 2007 were 4.1% above December 2006, 2) sales for the 12 months of 2007 were up 4.2 percent% from 2006, and 3) total sales for the October through December 2007 period (QIV) were up 4.9% from the same period a year ago. All of those three measures suggest that retail sales are strong and healthy. But you would never know that from the media headlines:December Retail Sales Slide 0.4% (WSJ)
US December Retail Sales Down 0.4% (CNN)
US Retail Sales Unexpectedly Declined in December (Reuters)
Consumer Spending Slowdown Deepens (AP)
US Retail Sales Fall in December (BBC)
Report Feeds Recession Worry (AP)
Reason: All of these reports focused on the decline in retail sales from November to December, which is actually fairly typical: In more than half of the last 8 years (5 out of 8), retail sales have either declined from November to December (2001, 2003, 2007) or remained flat (2000 and 2005).
Bottom Line: The chart above (click to enlarge) shows the annual growth in retail sales from the same month in the previous year, from 2001-2007. Over the last 18 months, there has actually been a positive, upward trend in retail sales, not a recessionary decline, see arrow above!
6 Comments:
Because of massive retail discounting it is quite possible that sales volume is up and profits are in the tank.
Show me the profit!
"When all is said and done, we have probably entered into a recession. The weakness in the holiday season was the tipping point," said Carl Steidtmann, chief economist at Deloitte Research
So anon is quoting a Krugman disciple, now do you have something credible?
Then there is this from the WSJ:
Producer prices declined 0.1% last month but rose 6.3% for all of last year, the biggest increase since 1981 and the result of higher food and energy prices. Excluding those categories, inflation was tame for the month and the year as a whole.
Real retail sales were flat in 2007.For all of 2007, the CPI increased 4.1%, the biggest gain since 1990.
Show me how massive discounting has resulted in anything but U.S. retail being on life support.
I would love to see a chart of absolute retail sales - that would probably look even better. Sales just keep going up and up, just not as fast - oh no!
Gross sales figures are unacceptable as one indicator of the health of the economy. Heavy discounting by retailers is going to reduce if not eliminate profits.
Consumers are stocking up in anticipation of inflation and retailers are dumping merchandise just to reduce inventory and at least capture part of the market away from competitors.
The winners in retail will not be those with the highest profits but those that are able to withstand the greatest losses.
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