Wednesday, May 13, 2009

Retail sales are not collapsing

Retail sales fell modestly in April, but they were higher than in December. The big story here is not the month to month changes, but the fact that the free-fall in sales which began last August has almost certainly ended. This is what a bottoming process should look like.

The things to watch for signs of a recovery are the things that trade in real-time. That's where the action is, and there are no lags in the data to worry about, no faulty seasonal adjustment factors, etc. On that score, industrial spot commodity prices are up 15% from their December lows, industrial metals prices are up 30% from year end, petroleum products are up almost 40% from year end, and shipping rates are up 180% from year end. According to the AAA, nationwide average prices for regular and premium unleaded gasoline at the pump are up 10% so far this month. And of course equity prices are up by one-third from their lows in early March. To me, the bulk of the evidence weighs in favor of an economy that is slowly recovering.

7 comments:

Cabodog said...

Scott,

My Costco-parking-lot and wait-in-line index still points to higher sales.

What I'm referring to is the amount of activity at our local Costco. I tend to shop mid-week and I'm continuously seeing a busier store. We live in a community that's been hit hard by the recession, so I make the assumption that if our Costco is busier, most stores should see increased sales.

However, that said, the what's-in-the-cart index still indicates most people buying essentials (food) than non-essentials.

I'd sure like to see updates somewhere on the amount of traffic on the roads these days, as driving equals commerce.

Gene Prescott said...

I've been visiting a local nursery (Plant and See) and Lowe's nursery department with regularity the past two weeks ..... I have to wait in line to check-out every time .... regardless of day of week or time of day.

PUBLIUS said...

I was at a Macy's store at 10:15 am about a week ago an had to wait in-line about 15 minutes, at a quarter after ten in the morning. This Macy's is located in western NY which, needless to say, is not a real commercial hub. Scott, thanks again for providing some sanity.

Cabodog said...

Just saw a similar posts on Twitter this morning:

Realtor in Canada: "What recession? Chinook mall parking lot is PACKED!"

Tallchick: "Every single checkstand is open at Target and the lines are still long. What recession?"

With the right searches, Twitter is a great tool for listening to America.

Chad said...

Scott,

Brian Wesbury over at First Trust points out that the two sectors that dragged retail sales down in today's report were gas stations and grocery stores. Considering we were paying about $3.75/gallon for gas this time last year and restaurant sales were up in the latest report, neither one should've come as a surprise.

He also points out that both export prices and import prices were up in a separate report this morning, supporting both your and his belief that deflation is no longer an issue and that money velocity is picking back up.

Scott Grannis said...

Brian and I have been on the same page for awhile now.

Ryan said...

I work for my mother-in-law, and wife's stores in the heart of Waikiki. They own two Coldstone ice cream stores, and Waikiki Aloe (which sells skin care and Croc shoes). Dad, things aren't good. If it weren't for the Japanese we would be out of business - no questions asked. A year and a half ago things we on the decline, but over the past few months, things have gottebn worse. Everyone is getting hit hard. People are begging landlords for rent reductions, businesses are closing their doors (all around the island), and hotels are just breaking even. I have a feeling that things are going to get worse. My mother in law compares sales figures from previous years and everytime she does, her jaw falls to the floor. And if anybody is curious, our locations are some of the best on the main drag "Kalakaua". Pray for us.