Retail sales rose the Econoday consensus of 0.1% in February, a weak reading.
However, January was revised from a solid 0.4% to a strong 0.6%.
Interestingly, auto sales fell in both January and February. Did consumers switch from buying autos to buying more junk?
A surprising point in this report is that these headline gains, though less than astonishing, were made despite weakness in the motor vehicle component which had been strong late last year and makes up about 1/5 of total retail spending. Auto sales fell 0.2 percent in February and 1.3 percent in January. Excluding autos, February retail sales rose 0.2 percent with January showing a standout 1.2 percent surge which is the strongest monthly gain in 5 years, since February 2012.
Gasoline pulled down February’s results, falling 0.6 percent after rising 2.1 percent in January. When excluding both autos and gasoline, sales rose 0.2 percent vs January’s very strong 1.1 percent. And control group sales, which are another core measure, inched only 0.1 percent in the month but follow an outstanding 0.8 percent gain in January, one that initially posted at 0.4 percent.
It’s the January revision that is most striking and which points to an upward revision for total consumer spending in the national accounts, one that came in at only 0.2 percent in the initial January report. Yet even the two months together, retail sales, though solid, are far from the astonishingly strong readings underway in consumer confidence, a mismatch that will play out in the months ahead. Another factor to note is that January and February are the two slowest months for retail sales, which makes for an outsized effect from seasonal adjustments.
Weather and Seasonal Adjustments
At least one economist thought sales would rise 0.9%. Amazing
Recall that December was cold and January was an exceptionally warm. I wrote about this in January (for December), and again in February (for January), accurately predicting the January plunge in factory output.
- January 18: Industrial Production Jumps Due to Weather: Good News Stops There
- February 15: Industrial Production “Unexpectedly” Declines Due to Weather: Economists Surprised Again, GDPNow Forecast Dives
On January 24, in Formulas Don’t Think: Investigating Weather-Related GDP, I commented: “Temperatures have been warmer than normal for most of January. Temperatures in Chicago hit a remarkable 60 degrees last Saturday.”
Optimism Warranted?
Econoday optimism is highly suspect. Seasonal adjustments in slow months on top of unusually good weather may account for the January spending surge.
Yet, despite good weather, auto sales fell 1.3% in January and another 0.2% in February.
Consumer Confidence
Econoday goes on with statistical nonsense: “Retail sales, though solid, are far from the astonishingly strong readings underway in consumer confidence, a mismatch that will play out in the months ahead.”
The Fed is a big believer in consumer confidence numbers. I never understood why because I could not see a strong correlation between confidence and spending.
The above chart courtesy of John Hussman as noted in What Does Consumer Confidence Really Measure?
Consumer confidence is a strong coincident measure of the S&P 500, not a leading predictor of consumer spending habits.
Mike “Mish” Shedlock
I call complete BS on this report. First off, the big retail store giants recorded “RECORD” fall in sales last month. Bank of America debit/credit card sales were awful. Amazon, however, did record about a 2% rise. But that 2% is not enough to offset the massive drop-off from the other retailers. The 0.1% rise is nothing more than the inflation numbers (CPI) creeping into the goods/products, nothing more. Anyone with a small inclination of economics realizes that the increase in GDP is nothing more than inflation. It’s really that simple. The economy is stagnant…at best.
Aren’t all Amazon purchases done with a debit/credit card? Which would mean the tally of card use is a much broader indicator of sales volume than just the one component Amazon.
One more thing…the Atlanta Fed came out today and is forecasting a roughly 1% GDP 1st quarter. And the CPI is running around 1.5% (LOL). There’s your growth. Fake economy!
AS I have said before, automobile sales are unsustainably high, unless people start junking perfectly good cars for the prestige of owning a new one.
Delinquent auto loans are piling up as I type…
And look at revolving credit in January. It was Negative! BS on their wall street generated numbers. The retail stocks tell the real story.
I can explain, consumer confidence is so high that they become confident and since they’re so confident they no longer need to buy things. When you’re confident about yourself you only buy what you need. Easy 🙂
Trump needs to create less jobs this month to reduce consumer confidence. Yah.
I did my part to Make Amerika Great Again, bought more chinese junk at Amazon,I’m living the american dream!
How easily dreams can become nightmares.
– and in 6 months when the chinese crap falls apart or quits working, you’ll buy it again. Crappy products are never cheap enough.
Atlanta Fed GDP Now forecast for Q1 was just dropped to 0.9%.
The economy may already be slipping into recession.
Having waited six-and-a-half years into “the recovery” to begin tightening, the imbeciles at the Fed are now in a panic. Desperate to get as far off the zero bounds as they can – while they can – so they will have room to cut later.
Almost comical to watch this level of incompetence in action.
Some people think the Fed is a part of the Deep State that wanted to keep things looking good for Obummer, and now they will bring on the next recession for the enemy of the Deep State: Trump. Of course, Donny will then get the blame, and the antiTrumpers will celebrate.
Never attribute to guile, that which can be easily explained by incompetence.
Yes I was thinking about Hanlon’s Razor also, but then, never say never.
Question, what odds this is from Greece, Italy, Spain?
Only a matter of time before the one thing the EU is supposed to prevent kicks off.
I doubt it’s from Northern Europe.
http://www.reuters.com/article/us-germany-security-idUSKBN16M1RQ
LMAO, haven’t you heard?
The Europeans are putting Carlos the Jackal back on trial for something. Yep, he made a court appearance just the other day.
Schauble, Barroso, Juncker, Van Rompuy, Trichet, Tusk, Djesselbloem, etc. and the rest of the criminal cabal continue to elude prosecution for their state crimes but the important thing is, they’re cracking down on somebody who caused a bomb scare in a shopping center back in 1974.
“However, January was revised from a solid 0.4% to a strong 0.6%.”
…
Well, about half of January’s upward revision due to lowering of December.
December (unadjusted) revised from $541.774 billion —> $541.179 billion
Sub Prime loan defaults In January rose to 9.1 pct from 7.5 pct the month prior. . Loans for autos have crashed by half since September. it is much worse than the numbers you have put up
Obama set up a investigatory body called the “The president’s advisory body on a unitary sales tax” to look into setting up a uniform federal sales tax across the USA. One of its interesting findings is that the top 20% of income earners buy 75% of all retail, and the bottom 80% buy only 25% of retail. That is why there is such a disconnect between polling people and what is actually happening. If the top 20% outspend the bottom 80%, three to one, then clearly it is the behaviour of the top 20% that is decisive. This is also the reason that quantitative easing worked, it enriched the top 20% propping up their spending.
Interesting stat. It also suggests that using a sales tax to increase gross revenue may be difficult if 75% of sales are by people whose spending is largely discretionary.