Retail Sales Experience Its Worst Run Since Lehman

March 12, 2015 1 Comment

If you’re a 4’10” central banker you would be very confused by this economic data we are witnessing. Initial claims fell last week from 325,000 (revision) to 289,000, which… is far to volatile to be seen as an accurate indicator of anything to be honest. If anything, you’re supposed to be looking at the 4-week moving average of initial claims. Even still, people still consider this an indicator of a strengthening labor market and a strengthening economic.

Although its pretty difficult to argue that the economy is strengthening, and retail sales are still falling. Sure, it’s falling at a much slower rate (Dec. -0.9% and Jan. -0.8%), but economist expected this run to be over by now, with retail sales having a positive increase of 0.3%. This didn’t happen, and now retail sales are experiencing its worst run since Lehman Collapse.

If this doesn’t surprise most economist, the prospect of the Fed still contemplating on hiking rates will definitely come as a surprise. In an environment where sales are falling, I don’t see how raising rates — something that discourages spending and encourages savings — is supposed to stabilize our economic woes.

Oh, and here is the kicker. It wasn’t gasoline prices. Not that it ever is:

Sales at gasoline prices actually increased 1.5% last month; however, sales actually fell in many more places, such as Food Services and Drinking Places, as well as Motor Vehicle Sales. When you exclude Auto Sales, retail sales fell -0.1%. When accounting for general merchandise without auto sales, you have a 1% decline, so this is just a bad report altogether. But, it’s no worries. We just need to have a subprime bubble to replace the housing bubble. And as along as consumers are spending their gasoline tax savings on Health Care  everything is fine.

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