The Census Bureau reported that retail sales rose +0.5% in January, and +0.6% ex-autos. December was revised from -0.3% to -0.1%. Year over year (not adjusted for inflation) sales were up 5.3%.
Gasoline only contributed +0.1% of that increase. That the sales increase were both with and without cars is also a good sign.
The important number for me is real retail sales, which is a harbinger of jobs growth, and which we won't have officially until the CPI is released next week, but we can estimate the total impact as being +0.4%. In January 2009 we had a retail bounce, the first sign of life from consumers since the panic of Black September 2008, so the YoY increase is about +1.5%. But the increase since the 3-month smoothed April 2009 low for real retail sales is at a rate of 3.0% a year. In the past this has indicated actual job growth.
From Bonddad:
Let's look at some specific categories:
Click for a larger image.
Note there were only four sub-categories that dropped. Two of those areas (furniture and building material/supplies) are housing related.
I've blocked off the last 6 months of data. Notice that we're had four months of strong growth. One of those months was effected by the infusion from cash for clunkers. But, note that after the one month fall off we've had three of four months showing an increase.
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UPDATE from NDD: The inventory to sales ratio for businesses fell to 1.26 in December. This is the lowest ratio since November 2007, but even more than that, it is the lowest ratio ever excluding that month and about 6 months in 2005. Businesses are running an extremely lean operation, suggesting that inventory depletion can no longer hold back GDP or employment growth.
7 comments:
The 1.26 is incredible....total business sales increased 47 billion year over year and total business inventories were cut 142 billion...businesses are lean and really mean.....Retailer's saw their sales increase 19 billion year over year,,,,and they cut their
inventories 55 billion....
One might question whether retail sales can continue to rise without income growth. Personal consumption expenditures now exceed income less government transfer payemnts. Unemployment compensation is sustaining consumption.
As I mentioned before, lead times are stretched out, no one's hiring. Businesses are waving away customers and pushing back delivery dates to avoid taking on risk.
I'm not disputing the data, but this isn't your parents' recession. Or, if anything, that's the point. You or your parents have never seen anything like this, and given how hysterically irrational Americans have gotten over the slightest adversity lately, they are breaking all the rules that make trends predictable.
It is very, very ugly in the trenches. My employer's lead time tripled and we're still the industry leader in delivery. That is farking insane.
Businesses will continue to run lean & scared until they're convinced it's safe to come out from under the bed. My biggest worry is that they will wait too long, and drag down the economy further, as jobs and business move overseas to countries more willing to take on the risk.
I dearly hope I'm wrong, but businesses with real money on the line are not nearly as optimistic as those looking at the data.
PJ: If growth in consumption leads to job growth, that in turn can lead to income growth. In the aggregate, consumers have accumulated a large "savings" cushion since the onset of the recession that can jump-start the process.
Dragonchild: I have read both of your comments, and had you in mind with the last part of the above post. Clearly there has been "hoarding" of jobs, and vendors apparently are getting away with long delivery times for now, and I suspect you are right that it is because this has been your great-grandfather's recession (really an old-fashioned panic or bust with an Oil price shock on the side). I suspect the pressure is building up like water behind a dam the spillways of which have been closed.
Retail Sales ex. GAS to employee ratio was at the start of the recession 2.436.The reaction to the financial meltdown was swift
and this ratio dropped to 2.30 in
December 2008. Today this ratio is
now 2.458. The catch the period between Dec. 2007 and December 2009
we lost 8 million jobs. The modest
addition of 1.5 million jobs this year will go a long way to preventing a double dip.It is almost biblical...jobs will begat jobs will begat jobs....
NDD: Yes, but if we're not going to be productivity/job/income led, if consumption growth will have to pull the locomotive, it will have to be supported by credit expansion.
In 2009, that's been the case, but it was the increase in the gov't deficit to $1.5 trn that expanded credit.
We won't see further expansions of government deficits. So private borrowing will have to do it. And that's shrinking.
So, if jobs/income don't grow soon, the shrinkage of credit will start to sap PCE. And the "pressure behind the dam" will start to dissipate.
NDD - thanks for the reply.
To be fair, I concede the pressure sure is there -- purchasers are demanding expedites (snerk) even as they insist on price cuts and are told "lead times are longer" until they hear it in their sleep. I just don't think much of it because purchasers have always been professional complainers. In the end, suppliers are going by what they know, which is that the purchaser will take the cheaper price and just whine about the delivery.
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