First, here is the chart of retail sales from econoday which I posted in my write-up
Notice the month to month declines were extremely sharp at the end of last year but have slowed since. This tells me the general trend has changed. Also consider the following charts from the latest personal income and expenditures report from the BEA
Durable goods purchases dropped hard in 4Q08, rose at the beginning of '09 but have moved lower. But the severity of the move is moderate.
Non-durable purchases are clustering right around the $2.320 trillion level.In other words, the total purchases of "stuff" is moderating.
And finally there are these two charts from Pollster.com
People are feeling better which means they will be more inclined to spend money.
Let me make clear: I don't think we're going to have a gangbusters, consumer led recovery. The US consumer still faces a weak job market, massive debt and a big destruction in his wealth over the last few years. This is not an environment where people will go out and spend. However, I do think that the overall trend of durable, non-durable and retail sales numbers indicates the decline is moderating and we will see a clear bottom over the next 4-6 month.s
2 comments:
One commentary I read earlier ascribed part of the drop in CC delinquencies in April to tax returns. Do you think that could also be having material affects on the month-to-month measurement here? That being said, I think RS may be beginning to "bottom," in the sense that maybe we'll see the m2m decline sustained at a more rational level (sub 1.5% or so, take your pick), so I do agree with you, I just wanted to see your thoughts about the tax affect.
Although the April sales report wasn't very good, and the March report was revised down pretty sharply, in talking with my retail clients, the first part of May has been better. I agree that we're bottoming, although it may be a bumpy ride for a while. At best the recent performance of retail stocks is likely signaling a modest bounce back in the back half.
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