Tag Archives: retail sales

Things You Don’t Know About Mitt Romney!

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Hat tip Joe Septa and the merry gang of ad makers at the White House, I found out these terrible facts about Mitt. I think you should know them, too, before you pull the lever in November.

Someone in the Obama campaign – it doesn’t matter who! – saw this and reported it. You don’t need to know the details. Really.

But..

Mitt will go to the express lane at the supermarket with 25-30 items when the limit is 15!

As governor, Mitt and his family parked in handicapped zones, knowing they’d get the ticket fixed!

Mitt Romney never sent me a get well soon card when my appendix came out. That’s how callous he is. Just because he was running Massachusetts at the time is no excuse.

Romney likes to make robo calls himself at dinner time, just to interrupt everyone’s meal. Through the use of drones from his super secret locations he can tell when every American eats and thus interrupt homey, quality time meals with middle class Americans!

His dog would poop on others’ yards and he never picked it up!

Romney threw away old paint cans at dumps without being environmentally safe. No wonder there is global warming!

He likes to break CFL lightbulbs and then run away, particularly in Democrat representatives’ offices.

Ann would put tooth fairy money out for the kids and Mitt would go and steal it. Ditto their candy on Halloween.

When he meets babies on the stump, Mitt likes to pinch them til they cry.

He likes to kick dogs before he ties them to the roof of his car.

What you don’t know about this menace makes Obama’s high unemployment rates, out of control deficit, lack of records from any part of his life, Solyndra scandal, Fast and Furious deaths, disposing of Medicare in Obamacare, terrible housing market and slump in retail sales pale in comparison, doesn’t it.

At least that’s what they’re hoping for in November.

Here’s a Breakdown on Today’s Economic Numbers

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It’s encapsulated well by Zerohedge:

When in doubt: baffle them with an economy that is both alive and dead (as has been the case for the past 4 months). While on one hand we saw a big miss in the Empire State Manufacturing Index, which slid from 20.21 to 6.56, on expectations of a +18.00 print, and the lowest since November, March retail sales in turn beat expectations, coming in at +0.8% on both headline and ex-autos, with the expectation for retail sales ex-autos at 0.6%, slightly less than the +1.1% retail sale change reported for February. Why are retail sales still strong? Goldman explained it earlier: “We expect that warm winter weather boosted retail sales over the last several months, but it is probably too soon to expect a negative payback in today’s report, given that temperatures were still higher than normal in March (and to a greater degree than in February).” Translation: consumers use credit cards to buy things in March they would otherwise have bought in May.

Is the Warm Weather GOP’s Best Friend?

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Every time financial data comes up unfavorably for backers of the administration, pro Obama analysts are quick to blame the weather. Snow and ice are the fall guys when retail sales fall short, construction is down, commodities skyrocket and unemployment decreases.

But what about when the weather is unseasonably warm as it has been across the nation this winter? Does that benefit economics and the stock market?

Here’s one opinion:

Back in early February, Zero Hedge was among the first to suggest that abnormally warm temperatures and a record hot winter, were among the primary causes for various employment trackers to indicate a better than expected trendline (even as many other components of the economy were declining), in “Is It The Weather, Stupid? David Rosenberg On What “April In January” Means For Seasonal Adjustments.” It is rather logical: after all the market is the first to forgive companies that excuse poor performance, or economies that report a data miss due to “inclement” weather. So why should the direction of exculpation only be valid when it serves to justify underperformance? Naturally, the permabullish bias of the media and the commentariat will ignore this critical variable, and attribute “strength” to other factors, when instead all that abnormally warm weather has done is to pull demand forward – whether it is for construction and repair, for part-time jobs, or for retail (and even so retail numbers had been abysmal until the just released expectations meet)…

Which simply means that the past 3 months of strength will be “cash for clunkered” quite soon, as all the soaked up extra demand disappears in coming months.

ZeroHedge then cites a report by Bank of America:

As expected, the February data continue to come in above consensus expectations.
Hot topic: Mild winter weather lowers energy consumption, but boosts almost every other sector of the economy.
Preview: Housing starts are likely to increase, but we expect existing and new home sales to edge lower…

February was a good month for the US economy. In the past week, retail sales, jobless claims and regional manufacturing indexes confirmed the strength already reported for employment and motor vehicle sales. As we have noted before, a variety of tailwinds continue to support growth, but should fade over the course of the spring.

This improvement in part reflects an incredibly mild winter. Average temperatures for December, January and February were the fourth highest since national data started being kept in 1890. According to the National Oceanic and Atmospheric Administration (NOAA), there have been 45 high-impact snowstorms that affected the Northeast since 1956, including five last winter, but none this winter. While the weather has small effects on the economy most of the year, weather has big economic impacts in the winter.
Is a mild winter causing artificial weakness in the economy? And, as such will the spring bring even stronger
growth?

We strongly doubt it and we would turn the perma-bull argument on its head. While warm weather hurts energy consumption (and small sectors like the ski industry) mild winter weather stimulates most of the economy. What is striking …is how weak growth has been even outside of energy consumption. Households saved a lot on their energy bills this winter—with a fall in both price and quantity—and despite this windfall, non-energy consumption was weak. In our view, this confirms that consumers remain quite cautious.

Looking ahead, weather is not particularly important in the spring. Hence, even if the weather remains mild, as some forecasters predict, the official seasonally adjusted data will likely drop back to pre-winter levels.

It is likely that the markets will get the weather story wrong on the way in and on the way out. How so? In the near term, the markets seem to be over-reacting to the better February data, seeing an improving trend rather than a temporary blip. Going forward, the markets will likely expect more of the same, only to be disappointed by a second quarter payback. We are particularly skeptical about the idea that the housing market is starting to turn in earnest.

In other words, this whole idea that the economy is improving is a mirage. People are cautious about spending, even after a boost from lower utility bills. Even given all that, the GDP remains weak. Inventories have caught up now, but will there be any demand later?

Right now, President Obama may be getting a boost from this economic picture, but if it comes crashing down in the summer/fall, it may deal him a fatal blow.

Add to this the increasing cost of gas, and it could torch his chances. Wouldn’t it be ironic if this small stretch of “global warming” smacked his and the Democrats’ chances?

Third Week of Jobless Claims Rising

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While media pundits may be enjoying the under 400,000 level of jobless claims, ZeroHedge notes this:

Initial claims print +362K, missing consensus of 352K, and up from a upward revised, (of course) 354K. As a reminder, last week’s print was expected to be 355K, instead coming at 351K spiking the market far higher. Needless to say, the response would have been far more muted had the number come at its true final print of virtually on top of expectations, but who cares anymore – everyone appears to enjoy lying and being lied to. That this miss comes ahead of a critical NFP (non farm payroll) print will likely have some scratching their heads especially since this is the first time we have seen three consecutive weeks of rises since August 2010. Also keep in mind next week, today’s 362K will be upward revised to 365K. Hence the immediate if not sooner need for more, more, more QE. Continuing claims also missed at 3416K vs exp. of 3400K, and rising from an upwardly revised 3406K. Finally, EUCs and Extended benefits rose by 27K.

Yesterday he had a commment on the rise in consumer credit that also needs a look beyond the headline number:

One look at the just released consumer credit data would make one believe that the US consumer is getting back into it and the velocity of money is finally starting to ramp up: after all the headline January number came at a whopping +$17.8 billion on expectations of +10.5 billion. Nothing could be further from the truth… January revolving credit, as in that used on one’s credit card, actually declined by $2.9 billion compared to December, and was back to $800.9 billion: the first decline in 4 months as consumers spend less following an already weak holiday season. Yet offsetting this was an absolutely massive surge in Non-revolving credit, i.e., mostly student debt, which soared by $20.7 billion in the month, the highest sequential jump in this category in history, leading to a very misleading print of a major increase in credit. And it gets worse: when spread by sources of credit, the only place where credit came from was the US government, which funded a near record $28 billion, all of it going into student loans, even as every other source of credit declined in the month! If this is not the most blatant gaming of headlines, we don’t know what is. But yes, America’s lucky students get ever deeper into debt slavery, only to realize upon graduation that there are no jobs that pay high enough to allow them to pay off this debt. Thank you uncle Sam – may we have another bubble.

In a special article by Jim Quinn of The Burning Platform, Quinn paints a grim picture of our economic state:

I hear the term de-leveraging relentlessly from the mainstream media. The storyline that the American consumer has been denying themselves and paying down debt is completely 100% false. The proliferation of this Big Lie has been spread by Wall Street and their mouthpieces in the corporate media. The purpose is to convince the ignorant masses they have deprived themselves long enough and deserve to start spending again. The propaganda being spouted by those who depend on Americans to go further into debt is relentless. The “fantastic” automaker recovery is being driven by 0% financing for seven years peddled to subprime (aka deadbeats) borrowers for mammoth SUVs and pickup trucks that get 15 mpg as gas prices surge past $4.00 a gallon. What could possibly go wrong in that scenario? Furniture merchants are offering no interest, no payment deals for four years on their product lines. Of course, the interest rate from your friends at GE Capital reverts retroactively to 29.99% at the end of four years after the average dolt forgot to save enough to pay off the balance. I’m again receiving two to three credit card offers per day in the mail. According to the Wall Street vampire squids that continue to suck the life blood from what’s left of the American economy, this is a return to normalcy.

And if this isn’t bad enough, consider the state of commercial real estate:

In my last article Extend & Pretend Coming to an End, I addressed the commercial real estate debacle coming down the pike. I briefly touched upon the idiocy of retailers who have based their business and expansion plans upon the unsustainable dynamic of an ever expanding level of consumer debt doled out by Wall Street banks. One only has to examine the facts to understand the fallacy of a return to normalcy. We haven’t come close to experiencing normalcy. When retail sales, consumer spending and consumer debt return to a sustainable level of normalcy, the carcasses of thousands of retailers will litter the highways and malls of America. It will be a sight to see.

Quinn explains how we got into this mess:

Your friendly Wall Street banker stepped into the breach and did their part to aid a vast swath of Americans to enslave themselves in debt… the slave owners on Wall Street have been the chief beneficiary of the decades long debt deluge. It seems that charging 18% interest on hundreds of billions in credit card debt can be extremely profitable for the shyster charging the interest. Decades of mailing millions of credit card offers, inundating financially ignorant Americans with propaganda media messages convincing them they needed a bigger house, fancier car, or latest technological gadget and creating complex derivatives that permitted banks to market debt to people guaranteed not to pay them back but not care since they sold the packages of these toxic AAA rated loans to pension funds and little old ladies, has done wonders for earnings per share, stock option awards, executive salaries and bonus pools. It hasn’t done wonders for the net worth of the average American who has been entrapped in the chains of debt, forged link by link over decades of purposeful deception and willful delusion.

He finds a media complicit in the lies:

They are incapable or unwilling to examine the actual data which substantiates the fact that Americans have NOT deleveraged and have NOT taken austerity to heart. The most basic facts fly in the face of consumers even having the wherewithal to pay down their debt. Median household income has declined from $50,300 in 2008 to $49,400 today. There are 5 million less people employed today than employed in 2008. Total wages in the country have only grown from $6.6 trillion in 2008 to $6.8 trillion today. This increase was concentrated among the .01%, who do not carry credit card debt. They profit from credit card debt. Real disposable personal income has fallen by 5% since the peak in 2008 as Bernanke’s Wall Street bailout zero interest rate policy has caused prices for everything except our houses to surge. The people carrying most of the credit card debt are the least able to pay it off. These are the same people who have swelled the food stamp rolls from 28 million in 2008 to 46.5 million today.

Yet,

The American people have come to love their servitude through a combination of self- delusion, corporate mass media propaganda, and an irrational desire to appear successful without making the necessary sacrifices required to become successful. The drug of choice used to corral the masses into their painless concentration camp of debt has been Wall Street peddled financing. Can you think of a better business model than being a Wall Street bank? You hand out 500 million credit cards to 118 million households, even though 60 million of the households make less than $50,000. You then create derivatives where you package billions of subprime credit card debt and convince clueless dupes to buy this toxic debt as if it was AAA credit. When the entire Ponzi scheme implodes, you write-off $200 billion of bad debt and have the American taxpayer pick up the tab by having your Ben puppet at the Federal Reserve seize $450 billion of interest income from senior citizens and re-gift it to you through his zero interest rate policy. You then borrow from the Federal Reserve at 0% and charge an average interest rate of 15% on the $800 billion of credit card debt outstanding, generating $120 billion of interest and charging an additional $22 billion of late fees. Much was made of the closing of credit card accounts after the 2008 financial implosion, but most of the accounts closed were old unused credit lines. Now that the American taxpayer has picked up the tab for the 2008 debacle, the Wall Street banks are again adding new credit card accounts.

With 40% of all credit card users carrying a revolving balance averaging $16,000, they are incurring interest charges of $2,400 per year.

Household debt as a percentage of wages in 2008 was 185%. Today, after the banks have written off $1.2 trillion of debt, this figure stands at 169%. Meanwhile, total credit market debt in our entire system now stands at an all-time high of $54 trillion, up $3 trillion from 2007. It stands at 360% of GDP. In 1992, total credit market debt of $15.2 trillion equaled 240% of GDP ($6.3 trillion). Was it a sign of a rational balanced economic system that total credit market debt grew by 355% in the last two decades while GDP grew by only 238%? I think it is pretty clear the last two decades have not been normal or built upon a sustainable foundation.

He notes that the aging Baby Boomers won’t be spending as much as their needs are reduced and since most have not saved enough for retirement. In addition, equity in their homes has evaporated.

On the flip side, young people will be burdened with the student loans fed by a compliant government. Now 40% of them are unemployed as well.

What we have is an unsustainable level of debt that will critically impact retail sales.

Jim Kunstler, also of the Burning Platform blog concludes:

“We tell ourselves we’re in an economic recovery, meaning we expect to return to a prior economic state, namely, a turbo-charged “consumer” economy fueled by easy credit and cheap energy. Fuggeddabowdit. That part of our history is over. We’ve entered a contraction that will seem permanent until we reach an economic re-set point that comports with what the planet can actually provide for us. That re-set point is lower than we would like to imagine. Our reality-based assignment is the intelligent management of contraction. We don’t want this assignment. We’d prefer to think that things are still going in the other direction, the direction of more, more, more. But they’re not. Whether we like it or not, they’re going in the direction of less, less, less. Granted, this is not an easy thing to contend with, but it is the hand that circumstance has dealt us. Nobody else is to blame for it.”

Retail Sales Crash

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As savvy readers know, there is data and there is real data.

For instance, talk of good retail sales abound, but where’s the proof? Zerohedge took a closer look at the numbers and found some disconcerting truths.

The topic of BLS propaganda seasonal adjustments has been discussed extensively here especially in light of January’s NFP beat. We’ll leave it at that. However, we were rather surprised to note that the Census Bureau may have also ramped up its seasonal adjustment “fudge factoring” because when looking at the January headline retail sales data, which naturally was a smoothly continuous line on a Seasonally Adjusted basis, rising from $399.9 billion in December to $401.4 billion in January, something rather odd happened in the Unadjusted data set: the plunge from $459.8 billion in December to $361.4 billion in January, or -$98.5 billion in one month, was the biggest one month drop in retail sales in history. Now we won’t say much on this topic, suffice to say that it would be far more useful if the BLS and Census Bureaus were to open up their models and explain in nuanced detail just what “old normal” adjustments they still incorporate into data sets. Because as many have already noted, seasonal adjustments used for data from 1980 to 2008 when “up” was the only allowed direction for everything, are completely irrelevant and misleading in the New Deleveraging Normal. Which reminds us: Zero Hedge will offer $10,000 to the first BLS employee to share with us the full and complete excel model set, including assumptions, data tables, and comprehensive output parameters that the agency uses to go from input A to output X. We hope that by spending that money we will finally do society a service and open up to everyone just how it is that the BLS adjusts its Non-Farm Payrolls data.

1,000 Short of 400K

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Two pieces of economic data came out today.

First, the unemployment claims went up 24,000 to 399,000 – just 1,000 convenient claims shy of the all important 400K number. This led to a delicious exchange on CNBC’s Squawkbox between Obama loving, liberal economist Steve Liesman and Tea Party instigator Rick Santelli.

Good thing they weren’t in the same room. It all started with a “throwndown” from Rick Santelli who challenged Liesman’s data on the Labor Participation Rate. Liesman had talked about older people retiring sooner; Santelli debunked him by saying that “the demographic argument you guys are discussing with regard to employment doesn’t hold water. 55 and older are actually staying in the work place; their labor participation rate actually the highest in many decades.”

The host declared it was a throwdown, eliciting further exchange.

“You can argue anything you want with these numbers,” Santelli said, which brought this response from Liesman: “I have a choice to make as to whether or not to believe the leading economists in the country or Rick Santelli.”

Santelli bit and said, “I tell you what, Steve, why don’t we put a call out to the country and see who believes the president, the economists more than their next door neighbor – you might be surprised by that, too.” He continued, “You’re talking to the wrong people, Steve. You know you can say a thousand economists say something, you know what I care about that, absolutely nothing,” Santelli said, making a big zero with his hands.

Liesman said what about a thousand traders? “That’s the people who should be basically running…”
Santelli interrupted, saying he didn’t care about them either. He said he spent three hours pouring over the Bureau of Labor Statistics numbers and “I did it myself, so you can outsource your brain to a bunch of people you don’t know… Anytime you want to debate you can bring your thousand economists and I’ll bring a $2 calculator and an internet connection.”

After the testy exchange they moved on to the second piece of economic data – the retail December sales number which was up .1% instead of the up .3% they had expected.

Zero Hedge observed:

The horrendous jobs update was only one part. The other one focuses on actual consumer spending, as confirmed by the major miss in retail sales which were up 0.1% on expectations of 0.3%, but the entire gain was due to car purchases primarily driven by cheap govt-funded subprime credit for GM vehicles. Sales ex-autos actually declined by 0.2%, on an expectation of 0.3% rise: this was the first decline and worst print since early 2010. So much for the consumer-led recovery. And so much for the unemployment pick up.

In the report, department store sales were actually down .02 and general store sales down .08. Remember when all those analysts were trumpeting Christmas sales? It seemed then that it was a chimera. It was.

Pollyanna vs. Scrooge Smackdown

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Could the economy be improving?

Michigan Consumer Sentiment today came in at a six month high. It rose to 67.6 vs. last month’s 64.1. Our trade deficit narrowed as well and many see Christmas retail sales up. There is optimism that Europe will come out with a solution to its Euro problem.

Don’t believe it say some economists. “Of course, a simple scratch beneath the surface reveals what many realists suspect,” says Tyler Durden at Zero Hedge blog, “expectations for the future are the major driver of the headline number. Unfortunately we have seen exactly this pattern before. Not only are the levels and changes similar to Q3/Q4 2008 but the underlying events (recessionary concerns, banking liquidity concerns, crisis of confidence) are eerily similar. The we’ve-been-down-so-long-it-has-to-get-better crowd psychology is intriguing as the rise in hope over the past four months is the largest in over 30 months as the delta between current reality and the green green grass of next year drops. While animal spirits are arguably of interest in short term macro cycles, we note that the ramps in the hopium index ten to last 4-5 months at most and that is where we are now.”

He’s not alone in his pessimism. On Fox Business News this morning Dan Shaffer was dire. The author of “Profiting in Economic Storms” joined Stuart Varney to discuss Europe’s part in this. Here’s the exchange:
Varney asked if Europe is kicking the can down the road in their Euro solutions summit.

Shaffer concurred and said, “It’s a natural cycle. They’re trying to fight a natural deflationary cycle. It’s in its early stages. They’re going to try to pump more money into the banks to try to save these bonds. Where is this other money coming from? They’re just chasing something that is an inevitable cycle. It’s like 1932. That’s where we are.”

Varney: “How do you invest then?”

Shaffer: “This is what I wrote in my book a year ago. Short the Euro, short the stock market or get out of the stock market and buy U.S. treasuries and stay in cash and safe investments. That’s this part of the cycle. This is not the time to be chasing real estate or yields.”

V: “We’re still in this part of the cycle?”

DS: “We’re in the early stages. This is going to last to 2013, could extend to 2016. Get out of commodities. This bubble is – again – we’re in the early stages of a deflationary depression. That means that people are going to start selling all asset classes so that they can raise cash because they’re not going to have enough money to fund themselves as incomes come down and asset classes fall apart.”

SV: “Deflationary depression?”

DS: “We had an inflationary depression in the 70s and now we’re into a deflationary depression.”

SV: “Europe’s headed for depression?”

DS: “The economies expand and economies contract. What we have now is almost every economy in the world is contracting and China is in the beginning of a contraction. The global economy is tied together. The Euro is just a part. On November 30, the last day of the month, the Federal Reserve in our country and 4 other Federal Reserves of other countries announced that they are pumping US dollars in the banking system in the next period of time. Why? What happened on November 30th? Debt is defaulting all over the world in U.S. dollars. I’m long in the dollar.”

Analyst Charles Payne noted that “cycles don’t have to happen. But if these countries continue to say we’re going to spend no matter what, vilify the rich, increase taxes instead of lowering them…”

DS: “No matter what they do they don’t have enough tax revenue to support the debt these countries are holding. So they are going to cut back on measures of spending money. Cutting back on spending money lowers GDP and it lowers economic growth. No matter what they do, they don’t have enough money to solve the problem.”

Two Faces of the Economy

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The American people are much smarter than our government thinks.

Take today’s economic information. Retail sales were up 1.1% in September. That has caused liberal economists to be gleeful. It is now something they call a “non recessionary indicator.” that’s politispeak for measuring something that isn’t there. Sorry, but nothing from nothing is still nothing.

Anyhow, other data was not so chipper. The Michigan consumer confidence slid from 59.4 to 57.5, worse than the experts’ expectation of 60. In addition, consumer expectations went from 49.4 to 47; the lowest since May 1980.

Zerohedge blog dubs it “schizophrenia.” How can these two conflicting data live in the same world, you might ask?

Americans who are savvy had a few observations. The same thoughts have probably occurred to you.

It could be inflation, write some, since these sales are not inflation adjusted. When the cost of everything is higher, it looks like sales are higher. Store closures, too, could account for it. It would affect same store and new store sales, boosting them.

Others have noticed that the Chinese are buying up many goods, given the weakness of the dollar.

Some commentators say that people are buying now because they are afraid they won’t be able to afford things later. Personally, I am purchasing things that are on sale, particularly meat. Call it hoarding or prudence, but many of us remember the inflationary 70s. Everything went higher, squeezing salaries.

Many people are preferring to buy little luxuries instead of big ones such as liquor. “The poor man’s gold,” says one, adding it is something to barter in bad times. It will go up, too, and has as I noticed at the wine store that the bottle I bought for $5.99 is now $6.50. Liquor, like gold, won’t spoil or go bad.

The media might check into the sales of anti depressants and see if they are up, suggest some.

Another lays the sales/confidence discrepancy to “binge bling buying before filing for bk (bankruptcy).”

Other people feel the government figures are just lies.

There’s probably truth in all of this. More truth than their numbers.

Numbers Game

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“Shoppers are in retreat,” said financial TV host Stuart Varney on the drop in retail sales reported this month. They fell .2% and that marks the first time in ten months that has happened. Part of it was auto sales which were down 2.9% in May.
“This economy is going nowhere,” Varney continued. “The recovery is not as strong as it should be two years after the recession.”
Another factor to consider is the May PPI, the measure of inflation. It weighed in at .2%, higher than the .1% expected. That means prices on most everything are going up and explains the drop in retail sales.

Confidence Down

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Today’s retail sales increased to the expected 1% today. Without car sales it was .07%.

Consumer confidence dived, however. It was 77.5 in February but today registered 68.2. It’s the worst reading since October and surprised analysts.

Charles Payne at Fox Business commented, “the component that I watch is expectations; where people believe things will be in six months. The reading is 58.3 from a month ago when it was 71.6. That is a gigantic drop