Commerce Retail Sales Data: Beware Gas Inflation

Yesterday, we looked at the abysmal Same Store Sales data (Retail Sales = Hard Landing ?)

Today, we will get the Commerce Department’s release of retail sales for April at 8:30am. It will look much better than the Retailers data.


Commerce includes the gasoline sales, where prices have spiked to their highest levels since the disruption caused by Katrina. The Commerce Department is measuring not just sales increases, but price inflation also. 

Consensus is for a 0.4% rise; Compare that with the ICSC same-store sales decline of 2.3% — the largest decline dating back to November 1970. The WSJ noted "Outright declines in overall monthly same-store sales figures in the
U.S. have occurred only twice in more than three decades of
record-keeping, and last month’s was by far the sharpest of those."

Thomson Financial tallied 85% of retailers missed expectations.

The ICSC chief
, Michael Niemira, stated: "It’s an ugly picture. The 2.3% decline is a wake-up call that something
fundamental is going on."

Back out gasoline price increases — but not sales increases — and you may very well end up with a different number . . .

The WSJ survey of economists, however, think the worst is over.

"Meanwhile, economists surveyed by said they expect continued weakness in consumer spending but the worst of the economic slowdown has passed. By a ratio of more than 5-to-1, they said the first quarter’s 1.3% growth rate, the weakest in four years, marked the low point in the slowdown, which began last year. However, they expect growth to stay below 3% into early 2008, leaving 2007 on track to have the slowest economic growth since 2003."

Of course, this group has missed noticing nearly every recession over the recent decades until they were nearly over, so take their cheerfulness with a grain of salt . . . 


click for larger graphic




Gas Prices to Boost Retail Sales for April
WSJ, May 11, 2007; Page A2

Economy Is Clawing Back, but Not Much
Economists See Signs of a Rebound in Growth, But 2007 Is Still on Track as Weakest in Years
WSJ, May 10, 2007

Retail-Sales Slide Fuels Concern
WSJ, May 11, 2007; Page A3

April sales weak; most retailers miss
Jennifer Waters
MarketWatch, 3:59 PM ET May 10, 2007

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What's been said:

Discussions found on the web:
  1. REW commented on May 11

    The English Lit major who plays economist on CNBC estimated that the trade deficit number yesterday could mean the first revision of Q1 GDP could drop to under 1%.
    Can you shed any light on this for your readers?

  2. REW commented on May 11

    The English Lit major who plays economist on CNBC estimated that the trade deficit number yesterday could mean the first revision of Q1 GDP could drop to under 1%.
    Can you shed any light on this for your readers?

  3. Winston Munn commented on May 11


    This is Nouriel Roubini’s information about the revision:

    Nouriel Roubini | May 10, 2007

    “Based on a variety of data that have come out after the first estimate of Q1 US growth at 1.3% it is now likely that US growth in Q1 was actually below 1% (probably close to 0.7%); we are thus already into a “growth recession” territory. As discussed extensively in this blog a US hard landing can take two forms: a “growth recession” i.e. a period of time when growth is well below potential and in the 0% to 1% range; or an outright recession, i.e. two consecutive quarters of zero growth.

    If Q1 growth turns out to be below 1% (as now likely) we would already be in growth recession range in Q1. The revisions of Q1 GDP growth that will push the revised estimate of Q1 growth rate below 1% are:

    – Lower change in inventories than initially estimated reducing Q1 growth

    – Better construction spending than initially estimated increasing Q1 growth

    – Much worse trade balance in March than initially estimated reducing Q1 growth

    The net effect of these three factors is an estimated 0.7% growth for Q1 (JP Morgan today revised its Q1 estimate downward to 0.8%).”

    And the retail start to Q2 is worse than Q1.

  4. Greg0658 commented on May 11

    REW – on your double post – please explain

    Did you post it then close the wwwExplorer program then come back to TBP in a new window? Because TBP doesn’t refresh itself after a post.


    Did it take 3 to 4 minutes for your post to get thru the pipes and possibly filters and you thought it never took in the first place?

  5. Greg0658 commented on May 11

    more info –
    Because TBP doesn’t refresh itself after a post if you back arrow out of the posting section and look for the count to increase.

    Close window and reopen.

  6. John commented on May 11

    Re: double posts

    Sometimes the confirmation of the post, via the return of your browser window to the comments thread itself, hangs up. Before you go clicking “Post” again, open a new window (or tab) and go back through your history to the comments thread. Your post should be there, and then you can simply quit waiting on the blog’s web server to get its act together. If it isn’t, you’ve still got your original window (or tab) and can go back to it and click “Post” again.

  7. erik commented on May 11


    keep up the great work. you are a good soul.

  8. Michael Donnelly commented on May 11

    Some revisions. Feb was 0.5%, now its 0.6%. March was 0.7% now its up 1.0% Sporting goods and Misc. stores up more than double what they were in the first release. This should add some to 1st quarter GDP.

    The revisions were so large that if you take the old March level and paste on the new April you’d get +0.13% instead of the actual -0.23%. Still bad, but not a drop.

    There is a pretty strong pattern with spending on gas and spending on all other items. Every time gas prices go up, it crowds out other spending about a month later, then as gas prices come down, other spending can expand.

    Spending on gas was up 1 billion in March and up another 0.6 billion in April, all other retail sales in April -1.445 billion.

  9. Rick Hanley commented on May 11

    CNNMoney lead item:

    Bulls, rested and runnin’
    9:37am: Stocks snap back on tame inflation, ho-hum retail sales – a day after the Dow tumbled 148 points. (more)
    Bears don’t have much hope if “ho-hum retail sales” drive snap backs?

    What’s the stage past ridiculous?

  10. Winston Munn commented on May 11

    Quote: “What’s the stage past ridiculous?”

    Answer: Fantasy

  11. Sponge Todd Square Pants commented on May 11

    I live in a yuppie neighborhood in a major US city. Condo construction is going on everywhere with lots of projects at various stages of completion. Many of them are the type that has 1st floor retail space with 4-6 units above. At the same time I am seeing lots of for sale signs popping up on existing properties. WIthin walking distance of me 2 boutiques a dry cleaner and a bar/restaurant have all ceased operations.

  12. Michael C. commented on May 11

    Anyone follow the FXI? Up almost 6% today.

  13. Winston Munn commented on May 11

    Quote: “Condo construction is going on everywhere with lots of projects at various stages of completion. Many of them are the type that has 1st floor retail space with 4-6 units above”

    Once committed, builders have no choice but to complete the project – this is another of the problems with the inventory increase. The housing recession will not play out in a year but take a few years to work out.

  14. JohnnyB commented on May 11

    anectodal stuff..

    I just wanted to chime in and give a glimpse of what is happening in my world as a financial advisor.

    For the better part of the past 15 months I have been reducing equity exposure for my clients. Nothing extensive, just cutting about 25% of equities and using cash, gold or long-short funds as an alternative.

    Most clients have been going along with this strategy as it seemed to make sense. Not too greedy and were not burying everything in the back yard. They still make money on the up and not lose as much on the down, right?

    Every client across the board bought into it but aha until the last two weeks.

    Just like in the final run up in 2000, which I am not drawing a parallel to, clients have now started to question this conservative strategy. This is not an isolated case. Multiple client households have either called and questioned if I could be wrong or tell me they are having a hard time standing “idle” as they say, while their office mate is making 4x what they are.

    My greatest career risk for whatever reason has never been losing too much it’s always been not making enough, or so it has seemed.

    So I believe we are now at final stages, possibly 7th/8th inning of the distribution game from the big boys to main street and joe and jane are the one’s who’s gonna be left holding the bag again. I be

  15. s0mebody commented on May 11

    Regarding retail stats:

    4 components were positive this month.
    Furniture +1.2%
    Food +0.5%
    Gas Stations +1.7%
    e-retailing +1.8% (data from

    I don’t believe the furniture number because I haven’t heard a good thing from any furniture company in many months. I also think e-retailing is an easy number to make up, but who says it isn’t right. And then we have the ex-inflation numbers, gas and food. What a great retail report. I think I’ll buy lots of stocks.

  16. John commented on May 11

    They’re at it again: driving the dollar and the yen into the dirt.

    All anyone need do is watch those two currencies. They correlate almost perfectly with the market. Yesterday the dollar and yen rose against everything, and the market sold off. Today, they’re both falling like stones against the EUR, NZD and others. Hence the rally. Carry trade on, Wayne!

  17. mhm commented on May 11

    “Anyone follow the FXI? Up almost 6% today.”

    I was considering FXI or EEM for a gamble May Put position yesterday. Got into EEM and now waiting for a Monday meltdown. Well, I can spend spare change on a fantasy right?

  18. Greg Feirman commented on May 11


    See that quote in the MarketWatch article you cited by Thomson’s Jharonne Martis:

    “April’s negative [results] are not necessarily an indication that consumers are not spending….. They are simply the result of the shift in the Easter calendar.”

    I mean, I know it’s not brain surgery!!!! But reasonable people can (and do) disagree here.

  19. John commented on May 11

    They KNEW about the g-ddamn calandar shift when they made the forecasts, Greg! You’re right–it’s NOT rocket science, let alone particle physics. It’s excuse-making, justification, spin and outright lies.

    But no matter.

    This rally is carry trade-driven, courtesy of our fine friends the business is war Japanese.

    Out of Iraq, into Tokyo! (I’m kidding, but only 95%; something’s GOT to be done about their currency debasement.)

  20. Michael C. commented on May 11

    Greenspan at his best today:

    My arithmetic says if there’s a one-third probability of a recession, then there’s a two-thirds probability there won’t be a recession,” Greenspan told a closed-door Merrill Lynch investor forum, according to an official at the U.S. investment bank.

    Greenspan said he doubted that unemployment would rise in China, should a stronger currency hit exports, adding that the country’s labor market was “very sophisticated.”

    Any slowdown will be somewhat offset,” Greenspan said, adding that he saw no repeat of the 1997 Asian financial crisis due to strengthened central bank foreign currency reserves.

    The chance of ’97 happening again is virtually non-existent.”

    The yen carry trade is not an economic phenomenon, it is a cultural phenomenon…

  21. REW commented on May 11

    Winston Munn, thanks for the details. My understanding is that the revision to Q1 GDP based on the trade deficit will be based on the difference between what the actual trade deficit was and the estimate used in the Prelim GDP calculation. But this estimate is not publicly known. So when folks now say GDP will be revised down to 0.7%, they themselves are guessing what the original trade deficit guess was. Whew!
    This is why I try to ignore GDP and stick to market-based measurments. Unfortunately, GDP is hard to ignore.

    Greg and others, sorry for the double post.
    After hitting post once, I got caught in a loop that brought me back to the verification page. I entered the new code and the post went through. Not intentional.

  22. Swiss Boy commented on May 11

    Interesting comment by Johnny B, same thing here (I work for a Swiss bank advising foreign clients). I advised the clients to reduce risk and they loved me for a while in March but are now coming back asking why I want to reduce risk when everything is going up.

    I wasn’t around in 2000 so I can’t compare, but some old people are becoming anything but risk-averse. It scares me.

  23. tjofpa commented on May 11

    Thanks for the giggles;

    Greenspan said he doubted that unemployment would rise in China, should a stronger currency hit exports, adding that the country’s labor market was “very sophisticated.”

    Is he talking about the 16 yr old peasant girls living 8 to a room in the co. compound?

  24. Winston Munn commented on May 11

    Down 150, Up 110. Sure, it’s just two days, but is action like this more consistent with bull or bear markets?

    The internal measurements I keep are still showing divergence – even with today’s seemingly good breadth it wasn’t as good as 10 days ago, hence a decline in the 10-day MA. Overall, the indicators I keep are showing a disconnect between the indices and the underlying stocks.

    I’m not so sure it isn’t the bottom of the 9th inning.

  25. Michael C. commented on May 11

    2 meager days of trading does not make a bull or bear market, especially given that we didn’t break any significant support or resistance. Gun to head, I would actually say this is extrememly strong price action again given the horrendous retail numbers.

  26. Ames Tiedeman commented on Oct 6

    Look what is on the Moon. Can this be our energy future?

    Look at this quote:

    When helium-3 combines with deuterium (an isotope of hydrogen) the fusion reaction proceeds at a very high temperature and it can produce awesome amounts of energy.

    “Just 25 tonnes of helium, which can be transported on a space shuttle, is enough to provide electricity for the US for one full year.”

    This is why China wants to go to the moon by 2017. We are going back in 2020. We need to get back faster. We should have a national goal of 2013, 5 years.


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