Retail Sales Take on Water

Retail sales numbers released today for March were down a disastrous -0.3% month-over-month. Usually, when you see a number this bad you also see an excuse. The most common excuse recently has been gasoline sales falling because gasoline prices have collapsed. Not this time, baby. Gasoline sales were up 0.9%–just about the only thing that was up.

March sales were pulled lower by auto sales which fell a very steep 2.1 percent in March and last posted a monthly gain way back in November. This is the biggest drop for vehicle sales since February last year. This lines up with other reports of slowing vehicle sales and a virtual collapse in the pricing for used cars—a useful indicator back in 2008 when the bottom fell out of the used car market just before stocks crashed. But the weakness in sales affected much more than autos. One sign of the month’s weakness was at restaurants where sales fell a very sharp 0.8 percent in the month.

The year-over-year comparisons help to clarify trends in the data. Overall, retail sales are up only 1.7 percent for the year, well down from 3.7 percent in February. Excluding autos, annualized sales are up only 1.8 percent.

Here’s the data:

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Is this evidence of the overheating economy that Janet Yellen referred to when she explained why she raised interest rates on December 16, 2015? Or is this just more evidence that the Fed has no idea what it is doing?

As already reported, the Redbook sales data and the reports on credit and debit card use have been pointing the way down. This is more down. It looks to me that the only thing that is up in this economy anymore is the use of the word ‘down’. Stocks soon to follow?