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Retail Sales: Another Wilting ‘Green Shoot’

August 13, 2009 5:43 am 0 comments

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Even as the government attempts to pump the economy with steroids, consumers are showing no signs of life. From Marketwatch, U.S. retail sales drop despite cash for clunkers:
U.S. retail sales fell 0.1% in July despite a boost from the government’s cash-for-clunkers subsidy, the Commerce Department reported Thursday.
It was the first decline in seasonally adjusted sales in three months. The report shows that consumer spending is still weak despite attempts by the government to stimulate demand. Sales at most kinds of stores declined in July.
Economists surveyed by MarketWatch were looking for sales to rise 0.8% in July after an upwardly revised 0.8% increase in June.
A near 1% miss in retail figures despite the short-sighted cash for clunkers program, which will hurt future retail figures. All the signs are pointing to a major downturn in 2010.
The government subsidy that gives owners of older, less-efficient vehicles as much as $4,500 toward the purchase of a new one had a major impact, as auto sales rose 2.4%. Analysts expect the program will have an even larger effect on sales in August. The program was running for just one week during July.
Excluding autos, retail sales fell 0.6%, against an expectation of a 0.1% increase. Sales excluding autos rose 0.5% in June and are now down 8.5% in the past year.

This is why you don’t call bottoms. Cramer called the bottom in housing back in June. He will look foolish yet again by next year. Retail sales were up 3 months in a row, which had everyone convinced we were bottoming. This latest figure puts to rest any claim of a V-shaped recovery, at least in retail sales. The restructuring of our imbalanced economy is a process- one that will likely work itself out over a 5-10 year period.