Wednesday, May 13, 2009

Retail Sales

Retail sales for April came in lower than expected. The market consensus was a drop of 0.1% from March, the actual drop was 0.37%.

Whether by force or by choice, the individual is doing the right thing. It is the "wrong" thing for the economy, in the short run. The improving savings rate will fortify consumer balance sheets so the next expansion, probably another year away, will have legs.

The numbers are staggering. Retail sales for 2008 decreased by 0.72% from 2007. That doesn't look like a large drop, but:

- this is a nominal number, unadjusted for inflation

- the average growth rate from 1992 - 2007 was about 5.13%

2009 is running about 9.17% below 2008. Although I only have data going back to 1992, I can't imagine a similar run occurring during anything other than a depression.

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