Retail Sales in July Rest Where Consumers Go to Die

Retail is Regretful

Retail Sales were misleading in July, as headline growth hid the fact that sales fell when excluding autos and gasoline stations. Most every other category lost ground in July. Meanwhile, a slight improvement in Consumer Sentiment might have some ignoring the fact that where sentiment sits now is where consumers go to die.

Markos N. Kaminis earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, and Mr. Kaminis has appeared across major media. While writing for Wall Street Greek, he presciently predicted the financial crisis in detail.

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Retail Sales in July Rest Where Consumers Go to Die

Retail Sales were reported for the month of July today, and the news was mostly sad. While overall sales improved 0.4% month-to-month, they fell short of the economists' consensus for a 0.5% increase. Meanwhile, June's reading was revised for the better, to a decrease of 0.3%, from the initially reported decline of 0.5%.

That said, when removing motor vehicles and auto parts from overall sales, retail sales increased just 0.2%. The ex-auto figure compared against a 0.1% decrease reported in June and was in line with economists' forecasts. Motor vehicle sales were strong, with motor vehicles and parts dealers posting a gain of 1.6%; some of the gains may simply have come as a consequence of weakness in June, as this segment's sales fell 1.3% that month.

"When excluding autos and gasoline station sales, the rest of retail sales fell in July"

The reason expert commentators and the market were generally glum on retail today though was because a broader more detailed look at the data reveals big trouble. While Retail Trade posted a sales growth rate of 0.4%, a lot of that came on special drivers (not only of autos). Gasoline stations, for instance, posted a fiery 2.3% jump in July sales on higher prices (and also on summer driving season). When excluding autos and gasoline station sales, the rest of retail sales fell in July.

As we look further at the details of the data, the trouble becomes clearer. The list of losers includes:

• Furniture & Home Furnishings: -0.3%
• Electronics & Appliance Stores: -0.1%
• Building Material & Garden Equip. and Supplies Dealers: -0.3%
• Food & Beverage Stores: -0.3%
• Grocery: -0.2%
• Health & Personal Care Stores: No Change
• Clothing & Accessories: -0.7%
• Sporting Goods, Hobby, Book & Music Stores: -0.1%
• General Merchandise Stores: -0.2%
• Department Stores: -1.0%
• Miscellaneous Stores: +0.8% (on a small number)
• Nonstore Retailers (web, catalog): +0.2%
• Food Services & Drinking Places: +0.2%

All the way down the line you see nothing but red in July's sales results. The International Council of Shopping Centers (ICSC) reported 2.8% growth in same-store sales for the month of July, but that is a year-to-year comparison. In truth, even that figure was weak, because it is matching up against the panic-level generational-low economic activity of last year.

Take No Solace in the Consumer Sentiment Score

Consumer Sentiment was also reported today by the University of Michigan (with Reuters), and it improved to a mark of 69.9, versus the prior month's close of 67.8. The result also beat the economists' consensus for 69.0. Congratulations!

Here's the problem, who cares that the reading improved slightly; such a small change is insignificant and might not even reflect real improvement. What we should be paying attention to is that this figure averaged a reading of 89 in the five years leading up to the recession that started in December 2007. Taken into proper context then, 69 does not compare well to a healthy reading, which is 89. So take no solace in consumer sentiment, because where we sit now is where consumers go to die.



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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.