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Retail sales were ugly in October, and this chart puts it into perspective. Some of this is due to lower gasoline prices, which is good, but in general it reflects a shell-shocked consumer. Aren't we all trying to cut back on unnecessary expenditures given the uncertainties out there? If confidence can return, sales can pick back up.
Friday, November 14, 2008
Retail sales collapse
Retail sales were ugly in October, and this chart puts it into perspective. Some of this is due to lower gasoline prices, which is good, but in general it reflects a shell-shocked consumer. Aren't we all trying to cut back on unnecessary expenditures given the uncertainties out there? If confidence can return, sales can pick back up.
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4 comments:
Scott,
My question would be, is it not likely that the US consumer has forever changed? The spending spree of the past was similar to a bubble, and that now a new reality will manifest?
H: I suppose that could happen. I would think that consumers are going to be more cautious (i.e., save a bit more) for quite some time as a result of this crisis. Just as lenders are going to be more cautious with their lending terms in the future.
So that means the economy is not going to bounce back strongly when this is over. But I don't think it means that we will have a new or fundamentally different world to deal with in the future.
Oh I want to believe you Scott, but the effects of an overly indulgent baby boomer generation coupled with the generation X group which I understand is about one quarter the size of the boomers, leads me toward the worst case scenerio. However, offsetting this U.S. demographic is the world growth trend, which I believe is nowhere finished. So the question becomes, can world growth support U.S. growth (standard of living)while the demographics improve for the U.S.?
Also, wouldn't the extremely larger size of the economy compared to those earlier points in history help to explain the larger numbers of potential defaults, etc. I mean data points based on percentages are not always linear are they?
Love your blog by the way.
Bob
Bob: The global economy is definitely going to support the US economy going forward, via a significant increase in the demand for our goods and services. As for demographics, I'd recommend the book "Fewer" by Ben Wattenberg. It is a fascinating and easy to understand look at global demographics. The US economy will be the only industrialized economy to continue growing in population size for the next several decades, and that should help us also.
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