Retail sales down for March

Today’s big news is that retail sales are down 1.1%. This is relative to the all-important expectations of economists of up 0.3%. The decline was broad-based and across many sectors. However, this is the first stab at the figures. They always are revised. In fact, lost in the shuffle of the news is that February, which was previously reported as being down 0.1%, was actually up 0.3%.

So is this news important? I have two takes on the news. One, yes it is important because the economy is moving forward and backward in fits and starts. But so far the recovery has been unable to move on all cylinders at once. The problem is that emotion drives confidence and confidence determines how people and businesses spend. Because of the fragility of people’s emotions, bad news has the potential to really be over-reacted to. Ugh!

My other view is that this news is not that big of a deal because consumers typically are a lagging indicator. Typically they are the last to realize and accept that a recession is underway or that a recovery has already taken place. Because of the general lack of sophistication of most folks, consumer spending being down is not a big deal this month. Obviously businesses have to respond to consumers so this is not a long term sustainable trend.

What could mitigate this state of affairs? If someone would take the time to talk directly to investors. Lo and behold, President Barack Obama is doing just that. Letting them know exactly what is going on, both bad and good.

The conclusion: this news isn’t that big a deal. The interpretation that I feel is appropriate is to use this news as an attention getter. So I will be paying attention to further signs of consumer mood one way or another.

Be well!

Jason


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