‘ July 14, 2015
Last month’s retail sales report for May was taken as the definitive sign that the slump had passed and that the conventional view of the jobs market was finally, if surprisingly belatedly, taking shape. It did not matter to economists that the only basis for that interpretation was seasonal adjustments, which had produced a huge disparity with the unadjusted set. I wrote then:
There is a lot about this ‘cycle’ which is totally upside down, but retail sales in May just might represent the apex of the Orwellian transformation; all on the say so of seasonal adjustments. The worst data in years, comparable only to the worst economicEXPERIENCES in recent history, are now counted as a ‘surge’ in spending and cause for both optimism and doom.
The mainstream interpretation sounded far more appealing despite its rather easily apparent illegitimacy:
U. S. retail sales surged in May as households boosted purchases of automobiles and a range of other goods even as they paid a bit more for gasoline, the latest sign economic growth is finally gathering steam.
With, again, statistical fancy as the only foundation for that recovery storyline, it is decidedly not unexpected that June would find its opposite effect. That is the nature of seasonal adjustments, as what they give alone in one month must be undone the next (when ‘surges’ aren’t really surges but statistical variation only). The decline in the month-over-month retail sales for June thus completes the trip, though the despair in the mainstream is almost psychotic with its ‘shock.’
A sample of just some headlines:
This post was published at David Stockmans Contra Corner by Justin Raimondo.