Good News is Bad News

It seems to me that the doom and gloom crowd is increasingly unhinged. I wish I had a nickel for every “death cross” posted on Zero Hedge in the last year. They post negative economic reports like we are about to succumb to the zombie apocalypse. Don’t get me wrong, I like ZH and I get a kick out of their posts, but there’s a line between pessimism and lunacy and they seem to cross it a lot lately. Karl Denninger is following the same path. He posted this the other day.

Ok, now this is a pretty nasty report...

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $439.8 billion, a decrease of 0.8 percent (±0.5%) from the previous month, but up 3.3 percent (±0.9%) above January 2014. Total sales for the November 2014 through January 2015 period were up 3.8 percent (±0.7%) from the same period a year ago. The November to December 2014 percent change was unrevised from -0.9 percent (±0.3%).

Yuck.

What’s worse is the unadjusted numbers.  Keep in mind that there’s this holiday called Christmas in December, but….

Retail, total, was down about 21% unadjusted.  But what’s worse is the lie in the above caption — previous-year comparisons.  The unadjusted January figures were up only 2.85% from January 2014, and if you exclude cars it was only up 1.41%.  Incidentally, ex-autos sales were down 24% sequentially.

You don’t need a seasonal adjustment for the same month in different years!

There was one bright light — gasoline, which was down big (24%).  But the claim that this drop in gas price would translate inexorably to other purchases appears to be flat-out wrong.  Instead, consumers are paying down debt and reducing their leverage — except on cars.

One final interesting point — non-store retailers were only up 2.57% from last January.  It appears that the “internet shopping craze” has finished its large growth numbers; this has an interesting set of implications for everyone selling and marketing on the Internet, particularly Spamazon.

PS: People are getting drunk more — to the tune of 13.1% more over last January.  Gee, I wonder if the lies are finally getting to ordinary folks……

Month to month changes in retail sales may be of importance to a retailer trying to pay his rent. In macro economics, no one really cares about it since holidays and seasonality play such a big part in retail. Restaurants and flower shops do better in February than January for obvious reasons. What matters is year over year. January 2015 was better than January 2014. But, Karl and his cult can have none of that so they focus on the month to month figure, which is meaningless.

As far as his comment about adjusted numbers, that’s nonsense. Lots of retail is done on weekends. If you gain a weekend day or lose a weekend day, it can make a big difference. The government plays games with the numbers so a certain amount of skepticism is warranted with regard to adjusted numbers. that does not mean all normalization of data is a fraud.

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james wilson
james wilson
5 years ago

Ditto. Zero hedge is a great source of information and perspective, but you do have to pick and choose. A lot. Quite like the internet. The general tone matches up with it’s readers, young, and enthusiastic that they have overcome a massive level of misinformation. What they have yet to realize is that is only the first level, the box inside the box. Modesty is a great virtue when trying to learn economics and politics. No one can learn when he thinks he already knows. There is no ten year period in my adult life where I did not move… Read more »

grey enlightenment
5 years ago

It’s noise. All these pundits pulling hairs out of a few tents of a percent. The economy is not going off a cliff. Things may not be great, but they aren’t so bad either.

Dan Kurt
Dan Kurt
Member
5 years ago

Dear Z Man,

Look back through the past 300 years’s economic history and one can see crashes, panics occur from time to time.

1929 is a long way off, a distant memory, for the USA and the world at large but perhaps a repeat of that collapse is near given: unfunded liabilities of the USA estimated at 120+ trillions of dollars and hedge funds becoming bubbles of perhaps more than 100 trillion of dollars.

Either the end of the line is hyper inflation or collapse I fear. I see no soft landing.

Dan Kurt