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Today, the U.S. Census Bureau released its latest nominal read of retail sales. It showed a decline of 0.4% from February, but a gain of 2.8% on a year-over-year basis on an aggregate of all items including food, fuel, and healthcare services. Nominal discretionary retail sales -- including home furnishings, home garden and building materials, consumer electronics, and department store sales -- declined 0.42% from February. That's 0.64% below the level seen in March 2012, while, adjusting for inflation, real discretionary retail sales declined a notable 2.27% over the same period.

On a nominal basis, there had appeared to be rough correlation between strong home value appreciation and strong retail spending preceding the housing bust, and an even stronger correlation when home values started to decline. The following chart shows the year-over-year change to nominal discretionary retail sales and the year-over-year change to nominal the S&P/Case-Shiller Composite home price index since 1993 and 2000.

As you can see, there is, at the very least, a coincidental change to home values and consumer spending during the boom and then the bust. As home values have continued to decline, retail spending has remained low but has not continued to consistently contract.

Looking at the chart below, adjusted for inflation (CPI for retail sales, CPI less shelter for S&P/Case-Shiller Composite), the rough correlation between the year-over-year change to the discretionary retail sales series and the year-over-year S&P/Case-Shiller Composite series seems now even more significant.

Source: Conspicuous Correlation: Retail Sales, March 2013