Tuesday, September 15, 2009

I think we should teach skepticism in school

The retail sales data came out today and EVERY news site ran with the Commerce Departments 2.7% INCREASE in retail sales in August. I hate having to do this again, but let's break it down again....

1 - The headline sales data includes the highly volatile auto sales which were skewed to the upside by Cash for Clunkers. Excluding auto sales, retail sales were still up a respectable 1% or roughly $3 billion. It's interesting to note that even with the massive Cash for Clunkers program sales for August were still down 5.3% from August of '08.

2 - So where did the $3 billion in added sales come from? Let's see:



Furniture down $120 million



Electronics up $90 million



Building material down $290 million



Health/Personal care up $90 million



Clothing up $400 million -- due to back to school shopping remember these numbers are shown increasing or decreasing relative to July. Relative to August of 2008 clothing sales were down more than a billion dollars.



Restaurants up $100 million

After netting all of these swings against each other you get a fairly modest jump of about $270 million showing sales up not 2.7% or 1%, but just 0.09%. Hmmm, something must have caused the big spike, but what?



Well, there was a $1.5 Billion JUMP in Gas Station sales - gas prices have been trending up all summer. There was also a $800 million jump in general merchandise sales at stores that include warehouse clubs -- many of which sell huge volumes of GAS!



So, the BIG JUMP - which was really a decline when compared to Aug 2008 - was due to Cash for Clunkers and rising gas prices. Sounds like winning combination for the economic recovery, huh?



I'd be more accepting of this sort of data regurgitation if it wasn't so easy to find the real data online. It takes about 12 seconds to search for the latest release from the census department and another 30 seconds to interpret the data and realize that sales didn't JUMP 2.7% in August.

If sales fall in the next few months watch out for people laying the blame at the feet of falling gas prices. They aren't giving gas prices the credit on the way up, but they'll blame gas prices if sales fall.

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Take this for what it's worth, but the level of short interest in the market is back at it's lowest level in more than 30 months. Either this means we are out of the woods OR if you subscribe to contrarian thinking, that things might be about to get worse.

Cheers!

1 comment:

Anonymous said...

It seems like nobody caught onto the fact that the CFC was 3bil, and retail was up, wait for it, waaait fooor ittttt. 3bil. Imagine that.

SMTF