Wednesday, July 15, 2009
Retail Sales Up
The retail sales chart has three important pieces of information.
1.) The free-fall that occurred at the end of last year. After the public learned that Lehman was bankrupt and that the entire financial system was in free fall they literally stopped spending on everything. This is the area of long-gray lines.
2.) The consumer has started to return to the retail sphere. This is the second area of gray lines at the right.
3.) The year over year decline has bottomed. This is the circled area.
The general slant of the latest figure was it was caused by gasoline and car sales. Therefore this isn't a real increase. While I agree that unadjusted gasoline sales helped to increase sales, the increase in auto sales is encouraging. Sales ex-autos were up .3%. The sales increase was obviously caused by the shutdown of dealerships which was part of the GM and Chrysler bankruptcies. However, consumers saw deals and bought them. And they purchased durable goods -- which is also a good thing. People don't go into debt if they don't have some confidence in the future.