Retail Sales – Good Enough

This morning’s retail sales report showed some small signs of deterioration, but still pointed to a positive overall level of demand in the economy.  According to the Census Bureau retail sales came in at a year over year rate of just over 4%.  This has tended to be a pretty good leading indicator of recession so it would be unusual to see this sort of figure during a recessionary environment.

In my opinion, the budge deficit and modest improvement in private investment are still enough to keep the consumer spending at a slow pace.  That means no recession, tepid growth, modest corporate profit expansion and a jobs environment that is okay, but not strong enough to bring us anywhere near full employment.

Here’s more from the CB:

“The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $416.6 billion, an increase of 0.1 percent (±0.5%)* from the previous month and 4.4 percent (±0.7%) above January 2012. Total sales for the November 2012 through January 2013 period were up 4.5 percent (±0.5%) from the same period a year ago. The November to December 2012 percent change was unrevised from +0.5 percent (±0.3%).

Retail trade sales were up 0.1 percent (±0.5%)* from December 2012 and 4.1 percent (±0.8%) above last year. Nonstore retailers were up 15.7 percent (±2.3%) from January 2012 and auto and other motor vehicle dealers were up 9.4 percent (±2.3%) from last year.”

Chart via Orcam Investment Research:


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. Well, it is time for ECRI to come up with some explanation…. They may be waiting for revision, yet time grows short…

  2. This side of the equation needs to be compared and contrasted with the growth of credit. Economic growth is only one part of the story, even if classical economists think debts does not matter. How many, for example, new auto loans are now backed by the US Government?

  3. Andrea, you are right. Yet, the issue is, ECRI knows pretty well all this stuff, probably much better than you and I. If they did not include it in the calculations, or severely underestimated it, it is their failure as recession predictors.
    Or, in two or three months we would get huge “unexpected” downward revisions of all major economic data )

  4. Japanese companies (with a lower yen) and European companies desperate for sales growth while in an EU recession, may take sales away from their American competitors in an incredibly competitive world. Hence, profit margins may be squeezed. We probably won’t have recesssion, but we could have a decline in profits.

  5. You are right. I am also in the minority of those who have to pay it back … lol.

  6. Part of the problem is that a credit crisis can loom undetected for months and years until it pops all of a sudden due to a random catalyst. I doubt indicators can do a decent job at providing a good timing signal. I’d rather think of it as “diagnosing” a problem, acknowledging that it is there, and keep an eye for a catalyst.

    The economy can look good until the very day before it all pops.