The only real noteworthy aspect of this morning’s retail sales report was the dramatic downward revisions to December. I’m not sure if the temperature readings have been similarly revised, given that it is now fashionable to correlate the two, but in either case the adjustment shaved off 85 bps of Y/Y growth for sales ex autos (auto sales were revised slightly upward).

The estimates for January sales are all-too-familiar and unfortunately not “unexpected.” January simply continues the ugly trend that we have seen really going back to the middle of 2012. The consumer is not resilient at all, instead stuck in a stasis comparable to previous recessionary periods.

ABOOK Feb 2014 Retail Sales Ex Autos Recovery

Part of the problem for economists’ expectations seems to trace back to the bounce in the middle part of 2013. Rather than see it in the wider historical context that features numerous such temporary ebbs and flows, it was simply assumed to be a durable trend and was thus extrapolated into the rest of 2013 and well into 2014. That was done despite the continued erosion in wages and earned income.

ABOOK Feb 2014 Retail Sales

So we see the now-familiar trend cut across the broad spectrum of consumer spending. That would strongly suggest this malaise is not likely some idiosyncrasy in a data point or specific industry.

ABOOK Feb 2014 Retail Sales Ex AutosABOOK Feb 2014 Retail Sales Ex Autos FoodABOOK Feb 2014 Retail Sales Genl Merch Nonstore

And no analysis of the consumer should be left without examining the economic bifurcation as a result of inflationary (asset) tendencies. There is far less economic strength and momentum where it has been left untouched by the hands of QE, with a fair argument that QE has actually left this broad segment much worse off for it.

ABOOK Feb 2014 Retail Sales Genl Merch

Finally, to get a clearer sense of proportion and context, we can compare the past five months with unambiguous periods of both growth and recession. These results add to the impression given by the Household Survey of payrolls and especially the decline in the overall labor force seen since the middle of 2013. That would imply perhaps a cyclical shift concurrent to the latent structural deficiencies left over from the Great Recession.

ABOOK Feb 2014 Retail Sales Comparisons w FoodABOOK Feb 2014 Retail Sales Comparisons wout FoodABOOK Feb 2014 Retail Sales Comparisons ex autos



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