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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
  • Retail Sales Not Building As Many Has Expected 0 comments
    Jul 19, 2014 7:36 AM

    I keep hearing pundits talking about consumer spending is building. They must have access to a data set I don't have access as June inflation adjusted retail sales growth remains in the same range (around 2% year-over-year growth) which we have seen every month in the last year. Retail sales were up according to US Census seasonally adjusted analysis but under market expectations. Our analysis is weaker. Note that the 3 month rolling average of sales growth is accelerating.

    Econintersect Analysis:

    • unadjusted sales rate of growth decelerated 0.6% month-over-month, but up 4.3% year-over-year.
    • unadjusted sales 3 month rolling year-over-year average growth accelerated 0.5% month-over-month to 4.9% year-over-year.
    Advance Retail Sales Year-over-Year Change - Unadjusted (blue line), Unadjusted with Inflation Adjustment (red line), and 3 Month Rolling Average of Unadjusted (yellow line)

    (click to enlarge)

    /images/z retail1.png

    • unadjusted sales (but inflation adjusted) up 2.5% year-over-year
    • backward revisions were up slightly;
    • this is an advance report. Please see caveats below showing variations between the advance report and the "final".
    • autos and building materials were the big headwind this month for retail sales growth, with food services, sporting goods, clothing, health and personal care, miscellaneous retailers, food stores, retailers expanding month-over-month.

    U.S. Census Headlines:

    • seasonally adjusted sales up 0.2% month-over-month, up 4.3% year-over-year
    • the market was expecting:


    seasonally adjusted Consensus Range Consensus Actual
    Retail Sales - M/M change 0.5 % to 1.3 % 0.6% 0.2%
    Retail Sales less autos - M/M change 0.4 % to 1.2 % 0.6% 0.4%
    Less Autos & Gas - M/M Change 0.3 % to 1.0 % 0.5% 0.4%


    Year-over-Year Change - Unadjusted Retail Sales (blue line) and Inflation Adjusted Retail Sales (red line)

    Retail sales per capita seems to be in a long term downtrend (but short term trends vary depending on periods selected - see graph below).

    Year-over-Year Change - Per Capita Seasonally Adjusted Retail Sales

    There is no indication in the retail sales data to date of a softening of demand either.

    Other Economic News this Week:

    The Econintersect Economic Index for July 2014 is showing continued growth acceleration. Outside of our economic forecast - we are worried about the consumers' ability to expand consumption because the ratio between income and expenditures continues near all time highs. The GDP contraction for 1Q2014 is a paper contraction as GDP is determined by playing games with accounts. For 2Q2014 GDP, the trade balance will be a serious headwind.

    The ECRI WLI growth index value has been weakly in positive territory for many months - but now 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

    The market was expecting the weekly initial unemployment claims at 300,000 to 325,000 (consensus 310,000) vs the 302,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 312,000 (reported last week as 311,500) to 309,000.

    Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line), 2014 (orange line)

    (click to enlarge)

    Bankruptcies this Week: Canada-based Essar Steel Algoma

    To view all analysis this week - [click here].

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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