Retail sales in recession

Retail sales were up 2.0% from a year ago and inflation is about 4%, meaning real inflation adjusted sales were -2%. That's exactly what happens in recessions.

In this chart I use a 12 month moving average to smooth out the data, currently we are at 0.4% real sales growth from a year ago which is nearly identical to the worst of the 2001 recession.

Of note: I (and others) have thought November 2007 was when the recession started and sales at that point (see chart) are nearly identical to sales at the start of the 2001 recession.

Was on a conference call this morning where one of the experts said the market would like the retail sales report because excluding autos, sales were up 0.5% this month. This is the second time I've heard this phrase

"Excluding the bad stuff, things are looking pretty good"

2 Real life examples:

1) Retail sales excluding autos (excluding the stuff going down) were up.

2) Earnings excluding the finance sector (where earnings are dropping) look good.

Since the economy is too diverse and complex for everything to act in unison, by definition if you exclude the stuff going the wrong direction, the remaining stuff will be going in the right direction.

Anyone have any other examples?

Today's chart is listed on Big Picture

Comments

[ED B]

you mean like having to choose to pay for gas to get to work or refilling your high blood pressure medicine?

Walking away from your home loan or short selling?

Tell your friend from the CC this morning to come down from his ivory tower and spend a week in South FL!

Cramer was right but misdirected, "they have no idea how bad is out here"!

[ED B]

Another thought;

Excluding the eboli virius, the patient is in good health!

[Michael Donnelly]

Thought of another one. The old chief economist at Merrill Lynch was pretty famous for saying stuff like exluding education and medical inflation is going down.

ie excluding all the stuff going up in the CPI, CPI is heading down