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Wednesday, September 14, 2011

Retail Sales Flat in August

The WSJ details:

Retail and food services sales were virtually unchanged from the previous month at an adjusted $389.50 billion, the Commerce Department said Wednesday.

Economists surveyed by Dow Jones Newswires had forecast a 0.3% increase. July retail sales were revised down to a 0.3% gain. The Commerce Department originally estimated 0.5%.

Back in February, I outlined that retail sales data was extremely noisy during periods of volatile prices as the data is shown in nominal (rather than real) terms. As the chart below shows, the relationship between retail sales (again, a nominal figure) and commodity prices (as reflected by ETF DBC) is strong.



This in itself fed into the PPI data that was released today, showing energy related prices have retreated from earlier this year, and my expectation is that CPI will come in below consensus tomorrow (we shall see).

So, retail sales are stronger than shown? Not so fast. Looking at the components of retails sales we see weakness in big ticket items (autos, furniture) and restaurants (details of why that may be troubling can be seen in the Pub Power index), offset by electronics and sporting goods (back to school?).



Net net, the consumer (who the U.S. economy relies on for ~70% of growth) is definitely stretched and the economy is definitely slowing.

Source: BLS / Yahoo Finance