Friday, December 11, 2009

Per Capita Real Retail Sales Continue to Be Horrible Compared with Several Years Ago

U. S. Retail sales were reported up in November from October, though substantially down from a year ago. More to the point, consider the accompanying graph from Calculated Risk. Click on it for greater detail.

It doesn't matter whether you consider gasoline or not. Basically, total retail sales are unchanged from 4 years ago. Since these numbers are NOT adjusted for price increases, here is the DoctoRx analysis.
Assume 4% population growth and 11% aggregate price increases have occurred in 4 years. So to keep pace with a growing number of people and mere price changes, retail sales should have risen 15%. Add a probably more realistic inflation adjustment and you have an even larger shortfall today from trend.
In addition, everyone can think for themselves on quality, but how many people believe that the quality of what you bought 4 years ago has increased in the intervening time frame?
The bottom line is that compared with 4 years ago, per capita real retail sales are down at least 15%. This is despite 2 formal stimulus programs and innumerable accommodations to the credit industry.
The future could be better or worse than the recent or more distant past, but all the recent money-printing has to go somewhere. I suspect that the Federal deficit more or less equals private corporate and other company profits, so that we have been going through a Depression of significant magnitude, but that stock prices were never allowed to fall to bargain levels as they did in the Great D.
It takes a brave investor to avoid jumping into the stock market when the headlines scream growth. This doesn't mean that the brave investor is wrong, but color me skeptical that what's going on now is other than a tired, uncreative financial system doing what it knows how to do but has forgotten how to truly innovate.
Extend the cycle and pretend there's real growth rather than serial debt bubbles, one piled on top of another.
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