Much was written about the retail sales numbers released Friday. If you're wondering why another article is needed then the answer is that I'm hoping to add some value by including the retails sales numbers in real dollars -- everything else I've read to date has been in nominal dollars. The tables below show the data with comparisons to one, two, and three years ago. Real retail sales are in January 2005 dollars. Note that since February 2010 inflation numbers are not yet in so I have assumed zero inflation.
I frankly didn't understand a lot of the enthusiasm in the commentary on the retail sales number. This might be due to residual relief after a horrible 2009, but it is unclear to me how anyone based on the numbers could conclude that things are going along well. The real data is what people should be focusing on, Table 2 above. To put this into perspective graphically, the chart shows real retails sales, the 12 month moving average, and the trajectory sales that were on had no crash occurred.
Retails sales and many other metrics indicate we are in a recovery phase, i.e. declines have stopped. Nevertheless, the data indicates this phase is very anemic, kind of like a patient on life support. Rather than cheerleading a monthly rise, which may end up being entirely due to inflation by the way, people should ponder what may happen if the life support is switched off, i.e. a) interest rates start to rise; and/or b) mark-to-fantasy accounting is abolished; and/or c) government stimulus is withdrawn. None of those things is likely to occur soon because, unlike the mainstream media, the doctor realizes the patient would not survive.
Disclosure: No positions