Thursday, August 13, 2009

Cash for Clunkers Conks Non-Auto Retail Sales

From Marketwatch:

U.S. stock market hears weak consumer pulse in retail data
July report an indication 'cash for clunkers' program dented non-vehicle sales

NEW YORK (MarketWatch) -- The stock market's enthusiasm over the government's "cash for clunkers" program waned Thursday in the face of data suggesting consumers exchanged old cars for newer models at the expense of other retail spending.

Investors were taken aback by the Commerce Department's report that U.S. retail sales fell 0.1% in July, as opposed to expectations sales would gain 0.8%. Excluding autos, retail sales declined 0.6% versus an expected gain of 0.1%. . .

Given that stock prices rose once again, it's not quite accurate to say that investors were taken aback. Of course, it's unclear how many buyers of stock these days are investors versus traders.

In any case, "cash for clunkers" is idiotic, cumbersome to administer, unfair to previous buyers of fuel-efficient vehicles, and misses the "green" mark. Simply raise the gas tax and be done with it.

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