There are several economic reports out today, none of them any good, especially retail sales, the most important of the reports.
Weakness was expected in this corner but not by those who still insist the economy is strengthening.
Retail sales declined 0.2% in March vs an Econoday consensus reading of 0.0%. Moreover, the Census Bureau revised February from +0.1% to -0.3%, and January from +0.6% to +0.5%.
First-quarter consumer spending is in trouble. Retail sales fell 0.2 percent in March which is under the Econoday consensus for no change. Importantly, February sales are revised sharply lower, to minus 0.3 percent vs an initial gain of 0.1 percent.
Vehicle sales round out the quarter with a 3rd straight sharp decline at minus 1.2 percent. Sales at gasoline stations, due to lower prices, fell 1.0 percent. But when excluding both vehicles and gasoline, sales could only manage — despite sky-high consumer confidence — a second straight 0.1 percent increase.
Other areas of weakness include sporting goods which fell 0.8 percent and furniture stores which were down 0.3 percent. And two special areas of weakness are restaurants which fell 0.6 percent for a second straight decline and building materials which fell 1.5 percent. These last two components are excluded in the control group reading which, boosted by a 2.6 percent gain for electronics & appliances and supported by a 0.3 percent increase for general merchandise, rose an outsized 0.5 percent. But even here, February sales for the control group are revised 3 tenths lower and now stand at minus 0.2 percent.
There are plenty of bad luck wildcards for March including heavy weather and late tax refunds. But today’s report also scales down what had already been a disappointing February. Total consumer spending (which includes services) came in with only 0.1 percent and 0.2 percent gains in the first two months of the year and today’s February revision points to the same for February’s retail sales component (note also that January retail sales are revised down 1 tenth to a 0.5 percent gain). Consumer spending makes up 70 percent of GDP and today’s results, however much they may raise expectations for a snap back, are certain to lower expectations for the first quarter.
Advance Retail Sales
This is likely to be a bigger hit to GDP than the models expect. I will comment further later today. Meanwhile, not the absurd reference to “sky-high consumer confidence”. For discussion of sentiment, please see Econoday Parrot Squawks Again after Sentiment Rebounds to 17-Year High.
Mike “Mish” Shedlock
which means higher taxes said:
means negative gdp print and start of “official”recession forcing trump to reverse and move with massive tax increase as deficits continue to skyrocket and clammer for war grows,increase prop. tax,gas tax,sales and some form of consumption tax
kevin smith said:
With regard to the restaurant performance index, I wonder if the decline in tourists coming from outside the US is hitting the restaurants? I know that Muslim [and for that matter Hindu and other colleagues] are disinclined to go to conferences in the US, and if they can’t/won’t go, I’m less inclined to go myself. We tend to stay in pretty high end hotels and resorts, enjoy fine restaurants, shop in high end stores, etc.
Chuck soli said:
Dream on , how self flattering
germans stopped coming to US after Trump election
that’s absolutely not true. We get a lot of Germans in Florida and they are here in large numbers, even with the now non-existent Zika threat. 🙂
kevin smith said:
I’ve now been to two meetings, one in London for about 1,000 people and other in Ireland for about 100 [plus a whole lot of additional people supporting the meetings. These would ordinarily have been in the US, but for regulatory reasons and because of border hassles the meetings were held outside the US. Tons of money not spent in the US, lots of jobs for the Brits and Irish. To add insult to injury, no US people were in attendance at either meeting. So they lost out the discussions and connections with some very bright and experienced non-Americans. The Americans will have their own meetings in the US, but non-Americans will not be invited.
Now I’m in Maui for a large meeting. Maui is fun, but Maui is also fungible. We could have a meeting just like this in lots of non-US places.
I hope that also spills into immigration patterns. That way us peons can keep our server jobs and get enough cash together to marry our cousins.
This is what we are seeing. Retail sales have collapsed and the numbers typically coming out of the government like consumer confidence simply don’t jibe. Spoke to a coin dealer yesterday and he told me that people are dumping their coins to the point they are taking just spot for Eagles. They told him they need the money to pay bills. There is something really off out there and yet we keep hearing about how wonderful the economy is.
Victor Adam Smith said:
I believe Mish has posted this before, there is a difference between confidence, or optimism and the act of final purchase.
I am very confident and optimistic. However as many Americans, I am buying off-retail more than ever. The quality of new goods is just not there. Definitely not there to justify their new, higher prices.
Apparently this is what is sinking Sears and K-Mart. In 2 years’ time, some items sold in Sears had their everyday retail priced DOUBLED! I’ve seen the same with K-Mart, charging double for items other mass merchandisers are also selling. Americans are just not buying it.
kevin smith said:
I have had great luck recently buying “factory refurbished” [brand new in a generic box] goods on Amazon, dirt cheap, mint condition.
Victor Adam Smith said:
Yup. With full warranty.
I think another rate increase is in order to bitch slap the american consumer back into spending
John Smith said:
But consumer confidence is at an all time high? Trumphoria rules the nation! Happy days are here again! This must be fake news because we simply don’t like it. We want our alternative facts in our alternate reality! Don’t make me live in the real world!
Citizen stupidity is certainly at an all-time high.
Due to higher health insurance premium?
I spent some time with out of town visitors in NYC SoHo today. Empty stores everywhere. I would guess that retail in NYC SoHo has a >10% vacancy rate, possibly >20% !
The only active retail shops were those of big chains.
It honestly felt similar to walking in a once posh rust belt retail district.
The West Village also had many empty storefronts, but SoHo was neutroned bombed
vouch: oh, boy, my sister lives in Chelsea nearby, but she works so hard that she barely gets out at all to notice. The last time I was there to visit her the area was bustling. SOHO is generally very “young, hip, urban”. That’s not the place I would think a retail/business die off would start, which brings up the question of how the other neighborhoods are doing.
Last year I ordered $100 in bicycle parts and related items on-line. That’s the least amount I’ve ever spent in a year. So far, I’m on pace to break that record at $0. I’m even selling two of my bikes, and a kayak. I just don’t want the extra stuff in my life. I’m satiated.
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