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Steven Hansen
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Steven Hansen is an international business and industrial consultant specializing in turning around troubled business units; consults to governments to optimize process flows; and provides economic indicator analysis based on unadjusted data and process limitations.
My company:
Econintersect LLC
My blog:
Global Economic Intersect
  • A Real Look At Retail Sales 1 comment
    Dec 14, 2013 12:20 AM

    I want to share a part of a post I did on retail sales this past week - showing the disconnect between the headline words and what the data is saying:

    Econintersect Analysis:

    • unadjusted sales rate of growth decelerated 0.3% month-over-month, and up 4.3% year-over-year.
    • unadjusted sales 3 month moving year-over-year average decayed from 4.3% to 4.1% (note that inflation adjusted averages growth accelerated).
    • unadjusted sales (but inflation adjusted) up 4.0% year-over-year
    • backward revisions were up moderately;
    • motor vehicles were the largest contributor to the gain this month, whilst gas stations and miscellaneous retail were the drag on growth.

    U.S. Census Headlines:

    • seasonally adjusted sales up 0.7% month-over-month, up 4.7% year-over-year
    • the market was expecting between +0.6% to +0.9% month-over-month seasonally adjusted sales increase (versus the 0.7% reported)
    Year-over-Year Change - Unadjusted Retail Sales (blue line) and Inflation Adjusted Retail Sales (red line)

    (click to enlarge)

    I do not really understand the seasonal adjustment process of US Census - but if i add the headline growth over a year period - it is always much better that the real year-over-year growth. Note that the headline data is not inflation adjusted. Yet the bottom line is that the inflation adjusted data is doing well - and it is inflation adjusted data which migrates into the GDP.

    The Econintersect economic forecast for December 2013 again improved. What this forecast cannot see is the real effect of austerity and Obamacare - but it does see that business is betting the effects on the economy will be minimal.

    The ECRI WLI growth index value has been weakly in positive territory for over four months - but in a noticeable improvement trend. The index is indicating the economy six month from today will be slightly better than it is today.

    Current ECRI WLI Growth Index

    (click to enlarge)

    Initial unemployment claims went from 298,000 (reported last week) to 368,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate. The real gauge - the 4 week moving average - degraded from 322,250 (reported last week) to 328.750. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.

    Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line)

    (click to enlarge)

    Bankruptcies this Week: none

    [To view all the economic analysis this week click here]

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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  • CautiousInvestor
    , contributor
    Comments (3090) | Send Message
     
    As always Steve solid, sober thinking. Lance Roberts published a study of retail sales without adjustments for either prices or seasonality and it shows the twelve month moving average increase in retail sales to be around 4% which squares with your numbers.

     

    Using Commerce data, the WSJ reports the following:

     

    When you just look at categories where people buy gifts, such as electronics, clothing and department stores and even add in online retailers, and exclude car dealers, gas stations and restaurants, sales were up just 2.8% in November from a year earlier. That represents the weakest nonrecession November in at least 20 tears and compares to a 4.7% gain for total retail sales.
    14 Dec 2013, 02:17 PM Reply Like
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