Wednesday, June 13, 2012

Retail Sales Sluggish

BusinessWeek details:

U.S. retail sales declined in April and May, pulled down by a sharp drop in gas prices. But even after excluding volatile gas sales, consumers barely increased their spending.

The Commerce Department said Wednesday that retail sales dipped 0.2 percent in May. That followed a revised 0.2 percent decline April. The back-to-back declines were the first in two years.

The weakness reflected a 2.2 percent plunge in gasoline station sales. Still, excluding gas station sales, retail spending rose just 0.1 percent in May. And it dropped 0.1 percent in April. That left retail spending roughly flat outside of gas sales for the two months, a sign that slower job growth and paltry wage increases may be leading consumers to pull back on spending.
The one thing not mentioned above that I find interesting is that furniture and motor vehicles (i.e. large purchase retail items) are #1 and #2 respectively in terms of strength. Perhaps (though not certain) people are just putting other items on hold as they make these purchases.

Source: Census


  1. Please help diseminate this.

    The regulators won't do anything.

  2. "If more money was withdrawn than invested in US equity products during 2009, coincident with record new and secondary stock offerings, amid the least amount of corporate stock buybacks and the most insider selling in recent history, where did the assets needed to recover trillions of US stock market capitalization and borrowings by the US Treasury come from?"

    My thought? This statement has many flaws (for my own sanity I'll ignore the aspects of how monetary policy actually works).

    Extreme example... assume the market cap of all equity securities in year 1 is $100 and bonds are $100 and investors prefer a 50/50 allocation. It's now year 2. Earnings are up 25%, so equity (at the same valuation) is worth $125. But bonds haven't moved and are still worth $100.

    In this scenario we assumed no new offerings, buy backs, etc... At year 2 an investor who desires a 50/50 allocation will actually net sell equities even though they are fairly valued. The net result may even be higher equity prices that are BELOW fair value.

    Hope that helps...