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Retail Sales edged up 0.4%

  • Oct Retail Sales+0.4% vs. +0.0% expected, +0.0% prior (revised).
  • Ex-auto +0.2% vs. +0.1% expected, +0.3% prior (revised).
Comments (11)
  • bbro
    , contributor
    Comments (9322) | Send Message
     
    Retail sales ex gasoline y-o-y up 5.3%....no recession in sight...
    20 Nov 2013, 08:35 AM Reply Like
  • Grant Dossetto
    , contributor
    Comments (139) | Send Message
     
    True, to a degree, but if you pull out auto sales (extremely easy financing right now) the number is pretty bad. It is not just bear market posturing when people are warning about retailers right now. Where I live (Detroit area), even the high end malls have a significant vacancy rate.
    20 Nov 2013, 08:55 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi grant,

     

    Reasoning fallacy.

     

    If you subtract where people are spending much of their money, of course you are left with where they are not spending much of their money.

     

    If they don't spend on cars, they have that money to spend somewhere else. Perhaps home improvements, maybe clothes, who knows. One can't subtract without re-allocating.

     

    You are confusing what people choose to spend money on with the amount of money they are spending.
    20 Nov 2013, 09:06 AM Reply Like
  • Grant Dossetto
    , contributor
    Comments (139) | Send Message
     
    Not a reasoning fallacy. You don't get the same financing on retail goods right now that you get on autos. If there was a decrease in auto spending it would not 100% correlate to an increase in clothing sales. I assure you that 0% financing for 72 months is not the norm for the auto industry and is artificially goosing sales. When that breaks, sales will get smashed and it won't flow to other retail. Housing has cooled off dramatically since the spring and Walmart didn't get a boost from that.
    20 Nov 2013, 09:11 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi grant,

     

    You are just plain dead wrong.

     

    If people don't spend on one item they spend on another. I never said there was a 100% correlation. Your ZERO correlation is failed logic.

     

    Depending upon what they buy, the effect could be better or worse. Cars aren't the only 0% interest deals around. They might buy a refrigerator (currently nothing down, no interest for 12 months) with higher margins and requiring less up front cash. Or many other 0%/0% deals currently offered.

     

    Maybe they buy cash, maybe they put on credit.

     

    You make no allowance for alternate spending, I say there is some allowance necessary.

     

    Regarding your housing/Walmart...that's my point. If the cars aren't being bought, the money would go there, instead.
    20 Nov 2013, 09:48 AM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (3536) | Send Message
     
    While some alternative buying would happen... some won't.

     

    Sometimes buying a car is because it's a good time / good price... that's not based on thinking of an x-sized pot of money I have to spend. (That's more of a booming economy customer mind set.) Could easily put, if not into a car, into savings. Those car purchases could be put off from the recession & job hunting time, and now everything goes to very basics (car) and savings for safety. More data is needed to know.

     

    Retail sales have seemed off a bit from company earnings reports.
    20 Nov 2013, 09:56 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Land,

     

    Agree with you, completely.

     

    One cannot simply erase some data points, as grant does, and not replace them with some others.

     

    I also agree that it is probably impossible to figure out "the road not taken", but to assume there is no other road is failed reasoning.
    20 Nov 2013, 09:59 AM Reply Like
  • Grant Dossetto
    , contributor
    Comments (139) | Send Message
     
    Ken,

     

    Mortgage purchase applications are down 20% since Spring. You show me where that freed up money has been spent in retail. In fact, while that was happening retail suffered a terrible back to school season. Home sales boomed because mortgage rates hit historic lows and you have to barely put any money down to purchase a home. When that easy credit scenario goes away, there isn't a lot of money to shift towards buying something else.

     

    We now have a situation where you can purchase a car for almost nothing down with 0% financing for at least six years and credit is so easy that they are selling to people who have been subject to repossessions just 12 months ago You need to put almost nothing down for a car today to "buy" a $30,000 vehicle (pretty close to the average price for a mid-size sedan). Easy money situations like this artificially inflate consumer purchasing power for a specific market and that purchasing power can't be shifted into something else.
    20 Nov 2013, 10:25 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Grant,

     

    I agree that easy money fuels spending. We saw that in the sub-prime bust. Consumers love to buy without spending.

     

    that said, my issue is very simple.... you cannot completely pull out one segment of consumer spending and draw results from what's left over. Plain and simple.

     

    If there were no cars there would be something else. Maybe savings, maybe other 0%/0% deals. Maybe not as much spent, but something spent. Some allowance must be made.

     

    When you eliminate one choice (the easiest) to spend money, consumers will spend on the next easiest. Plain and simple. Ignoring this is a mistake.
    20 Nov 2013, 10:34 AM Reply Like
  • Grant Dossetto
    , contributor
    Comments (139) | Send Message
     
    Ken,

     

    I agree in general. If the auto market was completely normal today, we'd be in 100% agreement. I don't think it is. As someone who lives in Detroit, an area that knows something about cars and car financing, I'd say that auto financing today is extremely lax, maybe even the easiest in history. I'd say in a normal market probably 70% substitution would occur. Right now, I'd guess it is around 30%. What that means is that the number is probably closer to the 2-2.5% than 5%+.

     

    It also means that when this auto boom breaks (and it will), we will see a significant drag on retail sales that I'm not sure will be offset by other merchandise sales.
    20 Nov 2013, 11:07 AM Reply Like
  • Reel Ken
    , contributor
    Comments (3850) | Send Message
     
    Hi Grant,

     

    Well, it looks like we're getting good at moving from one bubble to another.

     

    I agree, there's no way car sales can continue at this pace, unless China, etc., sales take over US slack.

     

    On the plus side, it increases velocity, which is greatly needed. I'm not qualified to say if the velocity created is enough to create sustainable broad-based growth. If it does, then it won't be so bad. If not ...well, it'll be a replay, for sure.
    20 Nov 2013, 11:16 AM Reply Like
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