Friday, January 15, 2016

I interrupt this Doomgasm

  - bby New Deal democrat

To put a little perspective on today's economic news, remember that 3 of the 4 reports primarily reflect what is happening with producers, not consumers.  It has been increasingly obvious for 3 months in the weekly data on shipping, steel production, and rail transport that this sector of the economy has gotten significantly worse.

Yet the same weekly data has shown consumers holding up.  Consumers represent about 70% of the economy. Nominal retail sales were down -0.1% in December.  The consensus for CPI is also -0.1%, meaning that real retail sales are likely to be flat for the month.

And how bad is that?  Here is the last year of real retail sales (blue) and real PCE's (red):

We have had much worse readings, including December 2014.

Now here are the same two measures going into the 2001 recession:

and the 2008 recession:

Even with today's negative number, the comparison isn't nearly so bad.

So today's numbers don't fundamentally change the dynamic.  The industrial economy is awful.  The consumer economy -- 70% of the total -- is meh, but positive.

Sent from my iPad