Friday, March 12, 2010

Retail Sales up 0.3%?

So, I guess the snow kept people from working but not from shopping? It didn't take people very long to see through the latest retail sales numbers despite Bloomberg's best efforts to put a positive spin on the data...

"Sales at U.S. retailers unexpectedly climbed in February as shoppers braved blizzards to get to the malls, signaling consumers will contribute more to economic growth.

Purchases increased 0.3 percent, the fourth gain in the past five months, Commerce Department figures showed today in Washington."


There are two key observations:

1 - The February number was up ONLY AFTER THE JANUARY NUMBER WAS REVISED DOWN. Assume your kid comes home with a 100% on their spelling test this week. Next week they bring home a 91% and tell you "but Mom, that's up 1% from last week! My teacher revised last week's test to a 90%, so you see, my trend is up!!!"

This is the game in statistics - people play with data to make headlines look good because the revisions are always forgotten. It's also interesting to note that sales tax receipts continue to plummet around the nation, but somehow retail sales are climbing. What's a better gauge of economic activity - actual sales tax receipts or a statistical model? I'll let you decide :)

2 - Gas sales were up 24% in February because prices have spiked. People aren't using more gas, it's just prices are up. If there was any gain in retail sales in Feb (I expect revisions to show a slight decline), it was almost all due to higher gas prices.

Cheers!

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