Top 10 Reasons to Doubt the Retail Sales Data
The UMich sentiment index and the Dept of Commerce (DOC) data released today remind me of the recent flap between John Mayer and Jennifer Aniston: heading in opposite directions and not looking back. Why the divergence? If retails sales are on an upward course, why isn’t consumer sentiment tracking retail sales estimates? Or, the more relevant question, why aren’t retail sales tracking the same course as consumer sentiment?
The UMich consumer confidence index for Feb was a dismal, and falling, 73.6, but according to the Dept of Commerce, retail sales for February (less autos) was unexpectedly strong, rising 0.8 percent over Jan and 3.9 percent over Feb2009. Today’s consumer sentiment reading registered at 72.5, with the future expectations index showing particular weakness.
Does this mean we can expect another uptick in consumer spending next month? (The short answer: All Signs Point to Yes.)
ZeroHedge recently posted some interesting commentary about discrepancies between Gallup Sales data and data released by the Dept of Commerce, favoring the Gallup approach, which showed marked declines in consumer spending since the beginning of the year. His reasoning: Gallup measures self-reported discretionary expenditures; on the other hand, the Dept of Commerce uses statistical sampling methods with retail store receipts and then makes ‘adjustments’ (aka: the fudge factor.)
Then, there is the picture presented by state and local sales tax figures:
Let’s take a more unscientific look at some potential causes for the diverging data. Here are your top ten reasons for doubting the DOC report:
Reason #10. Consumers have oppositional defiant deficit disorder (ODD).
Rationale: Even though the economy continues to shed jobs, personal income is down, and home equity loans are harder to come by, consumers are basically irrational and only want what they can’t afford.
Reason #9. Eyebrow-threading is out this year.
Rationale: The Commerce report measures only retail sales, not services; therefore, the data is biased to the positive because consumers are cutting back on luxury services like eyebrow-threading in favor of more ‘stuff.’
Reason #8. Snow makes people want to buy things, particularly electronics and appliances.
Rationale: That big TV doesn’t look all that big with all that white out there AND it’s blinding. Need bigger TV with higher resolution.
Reason #7. Speaking of snow, White Sales!
Rationale: It’s the prices, stupid!
Reason #6. The future will disappoint: so will death, but at least it is certain.
Rationale: Consumers don’t like what’s going on but, hey, uncertainty can be debilitating: at least I’m buying (doing) something.
Reason #5: People lie.
Reason #4: Advertising works.
Rationale: Consumers are sheep and easily manipulated. Look down! Look up! I’m on a horse!
Reason #3: Pricing of self-help books and other necessities surged last month.
Rationale: The Commerce report measures total receipts; therefore, the upswing is due to price changes, not surging demand. We can only assume the ‘Come On, Get Happy’ crowd came out in full force last month to buck the trend, despite the price gouging.
Reason #2: The Amish scare people.
Rationale: Fear is a powerful motivator and oppositional, extreme behavior usually follows. Society is at risk.
Reason #1: The adjustments are forthcoming.
Rationale: Hi, I’m from the government and here to help you.
What are your thoughts?