The fairy dust peddlers who moonlight as Wall Street economists were out in force this morning after March retail sales came in with a positive m/m change for the first time since November. This purportedly confirms that we’re back on track for a big rebound in Q2:
Ian Shepherdson, chief economist at Pantheon Economics, said he expected stronger sales in coming months as the drop in gas prices have built up consumer cash savings.
Now how in the world does he figure that? Total retail sales in March were up a miniscule $5.5 billion or 1.3% over prior year. But then again, gasoline sales were down $10 billion, meaning that consumer spending on everything else was up by $15 billion or 4%. So consumers weren’t hoarding their money or building a cash cushion for some big shopping spree later this spring – – -they were just reallocating it like they always do.
Today’s bubble vision jabbering about March retail sales, of course, is just more of the phony baloney ‘gas tax cut’ meme. The 50% cut in world oil prices did not put more income in consumers’ pockets; it just allowed them to spend a tad more on home improvement and restaurants and less on gasoline. But relative price changes and spending reallocations between categories come and go; and besides, this was the ‘advance’ retail report that is going to get revised several more times, anyway.
What might more profitably be asked is this: Has there been any improvement in the tepid rate of retail sales gain since the pre-crisis peak? The answer is no there hasn’t been.
In fact, the March monthly number of $441.4 billion reflected only a 2.1% annual rate of gain since the November 2007 peak. During that same seven year period the CPI was up at a 1.5% rate – -meaning that inflation adjusted retail sales have grown at only 0.6% per annum during the last 7 years.
This post was published at David Stockmans Contra Corner by David Stockman ‘ April 14, 2015.
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