Retail sales were ugly this morning. As I often say here, this recovery lies almost entirely in the hands of the consumer. This doesn’t bode well. Econoday reports:
Retail sales in April were surprisingly negative, dashing market expectations significantly for two months in a row. Overall retail sales fell another 0.4 percent in April after dropping 1.3 percent the month before. The April decrease was sharply below the market forecast for a 0.1 percent increase. Excluding motor vehicles, retail sales posted a 0.5 percent decline, after a 1.2 percent plunge in March. The fall in ex-auto sales was far worse than the consensus expectation for a 0.3 percent increase.
Declines in sales were broad based but led by electronics & appliance stores, down 2.8 percent; gasoline stations, down 2.3 percent; and food & beverage stores, down 1.0 percent. The downward tug by gasoline sales hardly explains the overall weakness. Excluding motor vehicles and gasoline, retail sales fell 0.3 percent after declining 1.0 percent in March.
Overall retail sales on a year-on-year basis in April were down 10.1 percent, down from minus 9.6 percent in March. Excluding motor vehicles, the year-on-year rate worsened to down 7.7 percent from down 6.3 percent in March.
Equities will not like today’s retail sales numbers. The green shoots view of the economy holds true only if the consumer sector stabilizes. Look for possible flight to safety in the bond market.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
eh
All this talk of recovery — “green shoots” — is total nonsense. How could it be that years and years of über-consumption, which was fueled by credit and phony house price rises, could resume so soon when those two primary drivers have been completely quashed. Not to mention the staggering job losses.
It’s just crazy.
At least the dollar is falling again, which is the first thing that has made sense for a while.
Onlooker
It looks like the market may have finally met a number it didn’t like. One it didn’t expect, in all it’s apparent naivete’.
Retail sales. Yep, the expectations had been set too high, waaayy too early with all this grasping at thin threads of second derivative improvement. Now we’ve finally seen a “worse than expected” number (even though there’s no way this shouldn’t have been expected) so the market is disappointed and may finally experience a bit of a let down.
Give ’em credit though, it was a marvelous propaganda campaign to lure the hopeful suckers into the tent to buy those additional issues of bank, REIT, and other shares. I guess it’s better than more taxpayer money, eh?