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Post by jeffolie on Nov 14, 2007 13:23:24 GMT -6
Retail Sales Slowed in October A couple of quotes ... From the WSJ: Consumers ‘Hanging on for Dear Life’ The report was weaker than anticipated due to a significant downward revision to August ... The retail sales report often contains some sizeable revisions, but a 0.4 percentage point adjustment to the two months back reading is unusually large. In this case, the revision was not concentrated in any single category — it was scattered across almost every component… The consumer is facing the twin headwinds associated with high energy costs and a negative wealth effect tied to lower housing prices. One of the keys going forward will be whether the labor market continues to provide sufficient income support to prevent too much of a slide in consumer demand. –Morgan Stanley Research From the National Retail Federation: Consumer Spending Continues to Show Restraint “Gas prices and other economic issues are beginning to have an effect on consumer spending,” said NRF Chief Economist Rosalind Wells. “While spending did increase in many important areas such as apparel and electronics, the consumer is showing caution while spending.” calculatedrisk.blogspot.com/2007/11/retail-sales-slowed-in-october.html
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Post by blueneck on Nov 14, 2007 14:23:07 GMT -6
I just heard on one of the business talking head shows last night that consumer spending has remained strong. What gives? How can this be with the rising costs of food, fuel, utilities, local taxes, medical and so forth? And home equity ATM and the credit cards maxed?
Are they doing some substitution like they do with core inflation? do they subsititue the increased spending on gas for buying consumer products?
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Post by unlawflcombatnt on Nov 14, 2007 19:38:06 GMT -6
Consumer Spending has not "remained strong." As usual, there were downward revisions of the previous year's totals, making this October's report look better. Today's report shows a year-to-date (ytd) Retail Sales increase of +4.1%. This is an overstatement, inconsistent, when compared with the originally posted numbers for October 2006. Dividing Oct. 2007's ytd total by October 2006's ytd total gives only a +3.25% increase. ($3,693.218 billion divided by $3,577.085 billion = 1.032465, or +3.2%) For the same ytd period ending period ending in October 2006, the Retail Sales increase was +6.5%. This makes this year's Retail Sales increase only 1/2 of last year's. It is much worse, however, when inflation is taken into account. The Consumer Price Index increased 2.69% over the last year (using Sept 06-Sept 07, since Oct 07 CPI not published yet). This makes CPI-adjusted Retail Sales increase of only +0.56%. (+3.24% - 2.69% = +0.56%) Comparing Oct. 2007's and October 2006's CPI-adjusted Retail Sales: The Consumer Price Index increased 2.06% (using the equivalent Sept 05-Sept 06 period) +6.5% - 2.06% = +4.44% = Oct 06's CPI-adjusted, ytd Retail Sales increase. +4.44% = Oct 06's CPI-adjusted, ytd Retail Sales increase. +0.56% = Oct 07's CPI-adjusted, ytd Retail Sales increase. This October's increase is only 1/8 of October 2006's. If the consumer is "hanging on," it's only by a thread. And a thin one at that.
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