A mix of hopes for lower taxes, less regulation, and increased fiscal spending, boosted both business leaders and consumers alike. Like the election, however, these surveys showed — particularly at the consumer level — a nation divided.And the year-over-year increase in retail sales clocked in at an increase of 4.9%. Sounds great, and consumer spending has indeed stayed strong as 2016 has turned into 2017, so there wasn't a "fear factor" for consumers of a Trump presidency, which might have made them want to shut down (of course, Trump hadn’t taken office for much of January, and some people still believed there wouldn’t be the tire fire of incompetence and instability that’s happened since).
And so it was an open question about whether there’d really be any follow-through from positive surveys, called “soft data” by economists, into actual hard data like increased spending. On Wednesday, it appears the early answer is that stronger soft data is leading to better hard data.
A report out Wednesday from the Census Bureau showed that retail sales in January rose 0.4% over the prior month, more than expected by economists. This is also notable considering that it came against a December report that was revised significantly higher — to 1% sales growth from 0.6% originally….
In a note to clients following Wednesday’s retail sales report, Paul Ashworth at Capital Economics wrote that, “The upshot is that the improvement in consumer confidence since President Donald Trump’s election victory now appears to be feeding through into stronger gains in actual spending.”
But if you looked at the actual retail sales report from the Census Bureau, you wouldn’t be breaking out the party hats at this time. Because the figures show that a good part of the recent increases aren’t coming from brick-and-mortar stores or from selling cars, but instead are coming from gas stations and online retailers like Amazon.
Retail sales change Jan 2016- Jan 2017
Total change +4.9%
Gasoline stations +13.9%
Non-store retailers +14.5%
All other retail +2.2%
Retail sales change Nov 2016-Jan 2017
Total change +1.3%
Gasoline stations +5.6%
Non-store retailers +1.9%
All other retail +0.8%
Not so impressive when you look at it that way. Seems like the continuance of a solid but not great expansion, however I could excuse the Wall Street types as merely being a little overenthusiastic, as they’re all about confidence games to begin with.
But then I looked at another big economic report that dropped today, and those increases in sales became even less to talk about- because they’re literally worth less.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.5 percent before seasonal adjustment.Well, there’s most of your retail sales “rise”, isn’t it? In fact, a 0.4% increase in retail sales while prices are going up 0.6% means a real loss in total sales. Yes, this varies by which area of retail we are talking about, but that certainly doesn’t seem as rosy as the folks at Yahoo! Finance wanted you to believe, was it?
The January increase was the largest seasonally adjusted all items increase since February 2013. A sharp rise in the gasoline index accounted for nearly half the increase, and advances in the indexes for shelter, apparel, and new vehicles also were major contributors.
The energy index increased 4.0 percent in January as the gasoline index advanced 7.8 percent and the index for natural gas also increased. The food index, which had been unchanged for 6 consecutive months, increased 0.1 percent. The food at home index was unchanged, while the index for food away from home rose 0.4 percent.
In fact, the 12-month inflation rate is at its highest point in nearly 5 years (March 2012), and the rise in 1-month and 12-month inflation hasn’t been accompanied by a similar rise in wages. In fact, the real wages report (which is released concurrently with the CPI report) shows that American workers fell behind in the first month of 2017, and haven’t gotten ahead at all over the last year.
Real average hourly earnings for all employees decreased 0.5 percent from December to January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.1-percent increase in average hourly earnings combined with a 0.6-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).Interestingly, the 12-month nominal increase of 2.5% in hourly wages is no different than we had a year ago, but because inflation has gone from 1.4% to 2.5%, the real wage “gains” that economic reporters were crowing about for much of 2016 have now gone away.
Real average weekly earnings decreased 0.4 percent over the month due to the decrease in real average hourly earnings combined with no change in the average workweek.
Real average hourly earnings were unchanged, seasonally adjusted, from January 2016 to January 2017. No change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in a 0.6-percent decrease in real average weekly earnings over this period.
Oh, but I’m sure wages will increase any time now, with ALEC-owned state legislatures like Iowa, Missouri and Wisconsin planning to pass more wage suppression measures in the near future (if they haven’t already), and a Koch-fueled Congress ready to take that mentality nationwide. Riiight. And all those downscale white guys in the Midwest rolled the dice with Trump because they were frustrated thought their wages and job security would improve by “putting America first?” SUCKERS!
And remember, this retail sales survey was done before the reality of the Trumpian disaster started to take hold. Now that high-level advisors are quitting and Cabinet appointees are bailing, (take our Governor…PLEASE!) when do people and businesses start to back off on their big-spending plans and wait for all of this absurdity to stop?
So like most things, the Wall Streeters and greedheads shouldn’t be confusing the stupid Trump Rally on Wall Street with an improving economy in the real world. Even the “great” retail sales report looks pretty bad when you realize that the gains aren’t because of more buying, but because of higher prices. And with workers' pay falling further behind, why would we expect these “strong” numbers to improve in the near future?