Friday, June 11, 2010

Retail sales remain strong

Retail sales were unexpectedly down 1.2% in May, but as these charts show, month-to-month volatility is to be expected, while year over year growth in sales is strong, running at 7-8%. Part of the reason sales fell was lower gasoline prices, and that is hardly a cause for concern. I don't see any reason to believe that the weakness in May was the start of a slowdown in the economy. To me it looks like a weak May was simply "payback" for a very strong (+2.1%) March. Real retail sales are running at a 4-5% pace, which is consistent with a moderate recovery. 


brodero said...

Not related but we saw significant
upward revisions to the business
inventories and business sales numbers.
Over the last 18 years the S&P
500 to Business Sales ratio has averaged 1.16. April's number came
in at 1100.8.

John said...


I would appreciate some clarification on the relationship between the two numbers you provide. I'm not getting the connection.

Retail sales from month to month can be a little volatile. A lot is being made of the 'decline' by the double dippers. The recovery is modest, as Scott has repeatedly documented. The road back to prosperity will be bumpy, and naysayers will be jeering all along the way. But the economy is growing and will continue to do so.

Unknown said...

Scott -

Thanks for the update on Retail Sales, seems to confirm the Household employment stats and typical recovery cycle.

Do you ever look at advertising dollars? The TV upfront ad sales was apparently well sold and and higher prices. It would seem companies are voting on an economic recovery with their advertising dollars too.

septizoniom said...

your optimism remains strong, or is v shaped. or you denial remains strong.

Scott Grannis said...

Jeff: I have noticed the uptick in advertising dollars. Seems like there are so many signs out there of improvement that it's difficult to be pessimistic.

Bill said...


Are you concerned that the ECRI index has turned negative? Does this just mean slow growth as opposed to an upcoming recession?

Scott Grannis said...

I think the ECRI index that everyone is concerned about is giving a bad signal. It's turned down because the growth rate of the LEI has declined. Things are still positive, but at a decreasing rate. That is simply the inevitable result of a sudden and sharp downturn, such as we had in 2008, followed by a relatively sharp upturn. At some point the change in yoy growth has to slow down, but that doesn't mean we are on the verge of a recession.