It’s odd how Retail Sales could have the nerve to be up when everyone knows it should be down. How does it do that?
Simple, really, higher prices where demand is not going to retreat quickly. Gasoline. And the stuff that uses it.
The problem is that the only really meaningful measure of Retail Sales (year-to-year) is gross dollars. I don’t know one way or the other, but I suspect the dollars are not adjusted for inflation.
Interestingly enough, the Wall Street Journal Online (in the subscriber area) was good enough to run a graph showing Increase in Retail Sales against another showing the same without gasoline station sales. The .3% increase (compared to an anticipated .4% decrease) appears to be slightly impacted by gasoline station sales (without the gasoline, it appears to be a .1-.2% decline). Although, this analysis doesn’t really account for the impact of the higher gas prices on retail prices (strangely enough meaning the numbers get reflected twice, kind of like some of our taxes).
Regardless, it’s really all a bunch of speculative mumbo-jumbo IMO. The Annual change in Retail Sales is a deceptive number, and it surprises me that this news caused the stock market to swing up today. At the same time, we’re getting more and more announcements of retail layoffs and a government desperate to stay in power is doing little more than tossing coins out the windows in the supposed hopes that they’ll show up in the retail shops… ain’t gonna happen. And the real hope is that voters will think they got a nice gift from Uncle Sam. Problem is, we’re just borrowing from an already bleak future.
Warning: I AM NOT A PROFESSIONAL ECONOMIST (nor do I play one on TV). I just have an opinion.
What’s the macro view here? I suspect we’re entering an economic adjustment. It makes me wonder if we need to bloat up the economy any further or let it settle to its natural and appropriate free market state. Interest rate adjustments are fine, but let’s stop messing around and running a shell game that’s just going to make things worse in the future.
Hat Tip: Wall Street Journal Online.
I’m not a professional economist either, and we can all make analytical assessments of whether the government should do this or that or whatever under any given scenario of which we know less than they do because we just don’t have the information. I laugh when I see someone criticizing Greenspan or Bernanke because obviously they’re smarter and would know better than they about how to be the most powerful Central Banker in the world. The reality is that if they were that smart, then they would be the Chairman of the Fed instead.
Having said this, a little fiscal stimulus coupled with monetary stimulus won’t kill us and may in fact avert economic disaster. The real issue is inappropriate government spending. It would be easy to balance the federal budget–just get rid of the Education Department! The side benefit is better schools and better-educated kids. As far as interest rates are concerned, it is better to have artificially low interest rates and allow ailing banks to heal than it is to rescue a bank the size of Citigroup, which WOULD be a disaster of global economic proportions.
It’s very difficult for me to criticize people that have more information than I do. My guess is that I’d do the same thing if I had the same data. Getting back to the stock market and retail sales–if you’re investing in the market and hoping to time it and get rich on a day-to-day basis, then you deserve to have your clock cleaned. On the other hand, if you’re investing because asset prices are artificially low and you have a long-term perspective, then chances are you’ll do very well.
Just my two cents…