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Wednesday, May 13, 2009

Unexpectedly????

It makes me wonder how much attention most financial analysts are really paying to their jobs. Bloomberg's article on retail:
Retail sales in the U.S. unexpectedly dropped in April for a second month, indicating rising unemployment is prompting consumers to boost savings.
Unexpectedly. Hah. Gas prices are rising, and utility increases from last year are still rolling through the system. Not only that, but last week's trade retail data was quite disappointing. And the real fault is in people who are more middle class than upper class, or Costco's same-store sales would not have fallen 8% in April. Nooooo way.

Anyway, total retail for came in at -0.4%. Report. March was revised down to -1.3%. April this year was quite assisted by the positioning of the Easter holiday, which shifted spending from March to April. In other words, to get a read on retail this spring you really need to average March and April. This is not an uptick and it is not a recovery. The reporting I see discussing "the recovery" amounts to a major ID 10 T errror.

I will have a much longer post later today on after a few more reports come in. I expect the current stock market rally to be close to an end.

Most disappointing in April's report were grocery store sales, listed at 43,007 vs March's 43,489. That is almost incredible, given the positioning of of Easter. But it does reflect the price wars and the caves I have noted in grocery stores.

Gas prices were rising in April, but gasoline sales also fell. I think a lot of people cut back on their driving again. One segment that surprised me in April's report was home & garden speciality (444). It racked up only a very small increase of 67 million dollars, and based on what I have been seeing in the stores and in mortgage/sales activity, I expected better.

Well, mortgage rates are rising again, and crude spot pricing and import prices don't forecast a good summer. The change in oil alone is enough to chop out most of the downward trend in basic living expenses, and that is going to truly hurt consumer spending this summer and into fall.

Some of the oil price increase is undoubtedly due to weakened confidence in the dollar due to Treasury spending. When you are printing money to buy mortgage and Treasury bonds, you are sapping your own economic life support system.


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