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June retail sales were weaker than expected (+0.4% vs. +0.8%), but they increased at a 4.6% annualized rate, which is about the same rate of growth that has prevailed in recent years. In short, there's no news here. No improvement, no deterioration. But it is remarkable that sales have easily exceeded—both in nominal and real terms—their pre-recession highs, despite there being 2 million fewer jobs than there were at the pre-recession high. Ongoing productivity gains explain why, and that's a good thing because productivity is the source of rising living standards.
This chart gives you an idea of how much better things might be today if the number of jobs had recovered to its long term trend. Sales are over 10% less today than they might have been given the long-term trends in place prior to the last recession. GDP is also more 10% below where it might have been: the shortfall is measured in trillions of dollars. That's what is so unfortunate about this recovery.
But it is nevertheless a recovery, and it continues.
4 comments:
I think Scott is about right--we have lost about 10 percent of our GDP due to this awful recession and lousy recovery.
Bush jr. deserved to lose, and Obama deserved to lose---neither one seemed to have a clue about monetary policy.
The fear going forward is that the Fed will actively suffocate the economy again by tapering down.
If you think I am being extreme, think about Japan and the BoJ. Rates war at zero, when they ended a QE program in 2006, after starting it up in 2001.
They went right back into perma-recession deflation.
QE is not unconventional when interest rates get very low. It is conservative conventional an prudent.
It is reckless to even talk about tapering down at this point.
Scott again at his best... trying to make job losses look good, as "productivity gains mean improvement in standard of living". Yes, for some (0.1%). For the rest, it's food stamps. Scott, of course, knows that this is a long-term recipe for social instability and disaster. But thankfully we have the NSA and drones to keep the underlings in check.
This is about retail sales, which has to do with consumption. Productivity gains have nothing to do with consumption.
If you strip out (ZIRP-fueled) car sales, the 3-month annualized growth in retail sales has slowed down to less than 1.5% (from 8.4% in December). Given what Ben's taper talk has done to rates, the end of the cheap-loan fueled car boom cannot be far away.
And, like in 2008, the Goldilocks-crew under the leadership of permabull Kudlow, will claim that "nobody could have seen this coming".
PS: The "output gap" and this deviation from growth trend are completely unfounded. It would help to look at the underlying numbers for once. Population growth, for example, has halved from 1.4% p.a. in 1991 to 0.7%. Population growth does not care about any former trend. It doesn't give a shit.
Look at growth in income. You can look at it from any perspective - nominal (2%), real (1%), per capita (0%), whatever you want.
Consumption, and hence GDP, cannot grow faster than disposable income (unless digging into savings / leveraging up the consumer with more debt). There is no way around it. Suggesting otherwise, just because one line somehow needs to go back to trend, is proof of a lack of understanding of the most basic economic principles.
Of note, on Tuesday July 16, 2013, a see saw destruction of fiat money likely commenced as Aggregate Credit, AGG, traded higher and the Regional Banks, KRE, and the Too Big To Fail Banks, RWW, led World Stocks, VT, lower, on the miss in retail sales versus expectations.
One Tuesday Mike Mish Shedlock writes Big miss in retail sales vs. expectations. DXLG has been one of the hot retail stocks of late, it traded down 0.9%, as the Retail Stocks, XRT, traded 0.7% lower.
Stockbrokers, IAI, Investment Bankers, KCE, Regional Banks, KRE, such as RF, the Too Big to Fail Banks, RWW, led World Stocks, VT, lower, as Aggregate Credit, AGG, traded higher, with the longer duration bonds, such as ZROZ, and BLV, trading higher more than their shorter duration peers, as the Interest Rate on the US Ten Year Note, ^TNX, traded lower, to 2.53%, on the miss in retail, XRT, sales versus expectations.
Tesla, TSLA, and Ford, F, as well as AXL, TRW, SMP, MGA, DORM,and DLPH, led Automobiles, CARZ, lower. Biotechnology, IBB, Clean Energy, PBD, Meida, PBS, and IPOs, FPX, traded lower as well.
Energy Partnerships, AMJ, and Utilities, XLU, led the Interest Bearing Equities, lower.
The Nikkei, NKY, traded lower. from its rally high.
Currency traders took the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, higher, forcing the US Dollar, $USD, lower. Gold, GLD, and Silver, SLV, traded up, taking Gold Miners, GDX, and Silver Miners, SIL, higher.
An inquiring mind asks, did an Elliott Wave 3 Down commence in stocks on Tuesday July 16, 2013?
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