Retail Accountability?

20080114_spend_graphic
Forget New Hampshire Pollsters — if you want to see some poor professional work, have a look at those who cover retail sales for a living.

I’m not naming names, but Cheese N Crackers! how many analysts, pundits and others totally shit the bed when it came to this year’s holiday sales?

Forget forecasting next month — how about understanding what is going oon RIGHT NOW? Or if that’s too complex, how about what happened last month?

Credit card debt turned up, the home ATM turned down, inflation was rampant, real income gains non-existent, the job market mediocre. On top of that, we had  much higher prices for daily requirements like Food and Energy — and still, there was total denial about how healthy retail is.

  Now, the MSM tells us Americans Cut Back Sharply on Spending. Really? You don’t say!

Those of us who are reality-based and paid even the slightest attention saw this coming a long time ago.

~~~

With December Retail Sales a minute from release, let’s ask this question: Who really blew it this year on Retail? What commentary was off base, ugly or just plain wrong?

Source:
Americans Cut Back Sharply on Spending   
MICHAEL BARBARO and LOUIS UCHITELLE
NYT, January 14, 2008
http://www.nytimes.com/2008/01/14/business/14spend.html

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What's been said:

Discussions found on the web:
  1. Strasser commented on Jan 15

    It is frightening when you consider credit card debt just hit $935.7 billion . . . that’s nearly a TRILLION dollars!

    Well, I’m sure it is “contained”, being “watched” by our concerned officials in Washington… besides, if Fannie and Freddie can help rescue the subslime, why not the car loans… and surely the govt can figure out a way to help those victimized credit card borrowers.

  2. Neal commented on Jan 15

    Negative talk is traitorous!! You made baby Jesus cry by not shopping!! The war on Christmas continues-we all know the true meaning of Christmas is buying cheap platic crap!!

    The excuse of the decade–No-one could have predicted.

    You think this year was bad, wait until next year.

  3. edhopper commented on Jan 15

    In other news; tax cuts lead to huge deficits and home values don’t grow at 20% a year.

  4. cinefoz commented on Jan 15

    Goldilocks = patriotism. There is nothing wrong with the economy that a good supply side tax cut won’t fix. Interest rates are a) too high b) too low c) just right. There is no limit to up. Democrats cause the problems.

    L.K.

  5. glenn_in_ma commented on Jan 15

    Brian Wesbury says retail sales are fine…critics focus on wrong metrics!! Just read it on his web site commentary. :)

  6. Stuart commented on Jan 15

    Brian Wesbury refuses to believe the titanic sank too.

  7. Marcus Aurelius commented on Jan 15

    When you drink the Kool-aid, you never see “it” coming.

  8. Marcus Aurelius commented on Jan 15

    Posted by: cinefoz | Jan 15, 2008 9:12:07 AM
    ________________

    Everything GWB and his cronies touch turns to shit. It might take a while, and he might only brush it with the sleeve of his jacket as he passes, but it will turn to shit.

    We should elect one of the Republican doofuses currently running. I’m sure they’ll straighten things out.

  9. SINGER commented on Jan 15

    I’ll tell you one thing….The markets did

      not

    miss Retail Sales being weak because these Retail names got slaughtered this year…(too many to count)

  10. Francois commented on Jan 15

    And Brian Wesbury is also member in good standing of the Flat Earth Society.

    His dorm buddy in college was Baghdad Bob.

  11. m3 commented on Jan 15

    they stopped spending? really? didn’t consumer debt rise to an all time high recently?

    cc debt is going through the roof. it seems like they’re spending MORE money but on less stuff. (inflation is a bitch, ain’t it?)

  12. bluestatedon commented on Jan 15

    Barry,

    I would expect nothing less from the “professional” mainstream journalists covering retail.

    It doesn’t matter what field you want to consider — economics and finance, domestic politics, international relations, the military, constitutional law, energy, sports, technology — a large percentage of the alleged journalists covering these topics have proven themselves to be lazy, uninformed, craven, and most of all, just plain stupid. And one consistent attribute the worst of them share is a blind contempt for and complete ignorance of the internet and blogosphere.

    I know there is a huge amount of crap on the internet, but there’s also a huge amount of hard, valuable information, and tremendous insight there, too. The best of the bloggers out there (such as BP) do more in one morning of blogging —and adds more value— than your average journalist lightweight does in a month.

  13. Steve commented on Jan 15

    “Even wealthier consumers, who were seen as invulnerable to rising gasoline prices and falling home values, are feeling the squeeze. ”

    Hmmm, I guess the bonuses at Merrill and Citigroup aren’t looking so good this year?

  14. cinefoz commented on Jan 15

    S&P breaks out below 1400. A trend? I hope so. I’m still waiting for S&P 1360, more or less, and supporting drops in Brazil, South Korea, and Hong Kong. When Brazil and Hong Kong break down, this will be a positive signal for an approaching bottom. Then … will it keep going down or will it be a base for a rise?

  15. Michael Donnelly commented on Jan 15

    whoa hold on their chief, some of us saw it coming. I wrote on my blog on Dec 14, Jan 10 and Jan 14 that retail sales would suck.

    I love Neal’s post here (2nd post) I’ve had two comments on my blog just like that, but they are serious. Both were business owners and both said the same thing. Don’t talk negative ’cause it’s the negative talk that causes recessions.

    If only I had that kind of power.

  16. Brett commented on Jan 15

    “Negative talk is traitorous!! You made baby Jesus cry by not shopping!!”

    OMFG that is awesome. GWB might not be dumb enough to say that on national TV but you can tell by looking behind his beady little eyes that he’s thinking it.

  17. techy2468 commented on Jan 15

    i agree with the theory “Negative talk leads to cut in consumer spending, and brings recession”

    recession is a part self fulfilled theory.

    bears have been screaming that the end of the world is coming…if we were to believe then and act accordingly, we will be in a depression….

    its simple:
    1. you hear bad news
    2. you get worried, start planning for bad times, cut down spending
    3. cut down spending leads to bad business, business cuts down spending and jobs
    4. lay offs leads to more bad sentiments, more spending cut
    5. more lay offs

    the cycle goes on till there is nothing more to cut down on.

  18. dark1p commented on Jan 15

    No one could have predicted how lame the MSM would become after giant conglomerates started buying it up.

    Except all of those people who were screaming about it, of course. But they weren’t on staff at the MSM, so they were completely ignored.

  19. Eric Davis commented on Jan 15

    If I hear “kitchen sink” quarter again…….

    they have such short memories, they said that the last 3 quarters….

    more bottom catching by the usual suspects….

    I thought yesterday was the bottom.

    Not that it couldn’t be the kitchen sink quarter.

  20. Stuart commented on Jan 15

    Bob Pisani just reported that people aren’t paying back their debt as fast as people thought. That’s the problem, the vast majority people analyzing and tracking this didn’t think. They didn’t think one bit. Like lemmings they just regurgitated whatever would work their own books. The people that actually thought about it, got their butts off the kool aid desk and did some detailed objective analysis, predicted it as a certainty.

  21. michael schumacher commented on Jan 15

    techy-

    step away from the keyboard

    People (wrongly or rightly) do not stop spending just because they hear a recession is coming. There is enough information to tell them what is coming-because the financial acumen of our collective country SUCKS they can ignore or engage. It is a choice to analyze that information and adjust accordingly or continue the bad practice of replacing debt with new piles of money.

    You have your cause and effect backwards.

    Just because you say the sun will rise in the west does not make it so. But I’m sure there would be a group of people sitting on the bluffs (here in SD) waiting for it to happen.

    Ciao
    MS

  22. sundevilsf commented on Jan 15

    I remember watching CNBC the week before Christmas and listening to one of the talking heads say “Although the numbers don’t seem very good so far, I’ve taken an informal poll of people at parties, and no one is done with their Christmas shopping yet, so it seems people are just waiting until the last minute this year.”

    I thought, “This woman really is part of the problem.”. The media as a whole, but certainly the TV-business-news stations seem to have lost all ability to objectively interpret and then report on the facts.

  23. BDG123 commented on Jan 15

    Brian Wesbury was also bullish in 2000. If Wall Street were truly driven by free market principals they supposedly espouse, he’d be pushing a broom. This is what a cartel will get you. Pervasive incompetence.

  24. Pool Shark commented on Jan 15

    edhopper,

    “In other news; tax cuts profligate spending lead to huge deficits and home values don’t grow at 20% a year.”

    There, fixed that for you.

  25. dark1p commented on Jan 15

    Techy2468, you do have a bit of a point. Unfortunately, it doesn’t start that way.

    The media most often reflects the positions of the ‘experts’, especially those in government and the financial establishment. Until recently, the message being pumped out was that everything would be fine, messes would be contained, the economy is creating jobs, etc. Meanwhile, the people down the street discovered that they had to drop the price on their house $50,000 in order to unload it, and word spread. People got nervous. The price of gas, food, heating, medical care and education went through the roof, and family budgets were adjusted accordingly. Maybe some people knew folks who got laid off and ended up working at Burger King or Wal-Mart. And so on.

    The thing is, 99% of Americans don’t pay much attention to financial or economic news. Most people don’t read newspapers (or anything else). The vast majority don’t watch CNBC. The negative news reports — when they finally start showing up — only confirm what a lot of middle-class and poorer people already know: things aren’t so hot. The MSM (which is the only media most people get any information from, such as it is) is an incredibly lagging indicator of what’s going on in people’s lives and the mass psychological mood.

    So, yes, negative reports can make negativity worse in that they tend to validate the turn in psychology and further increase awareness. But people don’t pull in their spending horns because they hear bears on TV. They do it because they realize they can’t actually afford a lot of stuff anymore. And they tend to be heading in that direction long before they encounter ‘gloom and doom’ on the MSM. By that time, even the big-money financial guys and government people like Paulson (er…one and the same?) are spouting reality.

  26. ECONOMISTA NON GRATA commented on Jan 15

    My question is, and I’m not trying to rub it in, so please forgive me in advance and please don’t take offense.

    Did any of the posters in this blog vote for Dubya…?

    Not that the alternatives would have been much better. However, looking back, Dubya makes Robert Mugabe look pretty good.

    Best regards,

    Econolicious

  27. Eric Davis commented on Jan 15

    Ah, Those charts are topping patterns….in a few years….

    I love the argument that “its the media talking about it that causes recession”

    Total Denial, Finger Pointing, effect = Cause thinking.

    Well, maybe not, I always default on my credit cards because the media says “the economy is in trouble.” I figure it’s my part in helping the economy….. and so do the rest of my fellow god fearing patriotic Americans…..

  28. RU12 commented on Jan 15

    In the name of God people, it doesn’t make a dime’s worth of difference whether they have an R or a D after their name. If you think you’re going to like another Clinton regime any better than Bush, you’ll find out otherwise.

    It’s like a choice between a headache and an upset stomach.

  29. Jay commented on Jan 15

    It just seems to me that the American economy is not only dead-flat busted, but up to its ears in debt. Take inflation, real inflation in the form of health care, college tuition, gasoline and heating and electricity prices, housing, and food. Combine that with household credit card debt–what’s the figure? $937.5 billion, about $3,500 for every man, woman, and child in America–which probably stands at about ten percent of the average wage earner’s annual salary. (When you look at that debt in terms of a per-household basis it gets even worse.) Then compound that debt at 30% per annum because of missed payments. Then combine that with the fact that wages that haven’t seen increases for about a decade. Then make it harder to file for bankruptcy so the thing sputters gasps along with a sucking chest wound for a 12-24 more months.

    No wonder Helicopter Ben wants to print more money and devalue the currency. The only way to make credit card and corporate debt palatable (and buoy the market) is through inflation. This also has the effect of making the Chinese rethink their yuan/dollar coupling, makes their treasury and securities holdings worthless, and makes European goods extremely uncompetitive–all good things for large US corporations. But unless US wages increase–and they won’t–and prices come down–impossible in an inflationary economy–the bottom will fall out. You can squeeze consumers/workers till they squeak and give them credit on terms favorable to yourself, but at the end of the party the roof’s going to cave in.

    That’s what’s got the Bush Administration spooked. Knowing him, he’s probably trying to pump something up so that the economy gets past his tenure and the bill comes due after November, 2008. He’s also probably trying to give the big money interests enough time to quietly exit whatever positions they have so they can sidestep the whole fiasco, then come back and buy everything at firesale prices. What’s going to happen will be like the S&L crisis writ large, only this time it will be Citi, BOA, etc., etc., and will topple the other banks globally.

    Where is the smart money going for the 6 – 12 month window?

  30. student commented on Jan 15

    I’d like to see student loans added to that graph. I can’t tell you how many too-good-to-be-true offers I’ve gotten over the past few years to refinance mine. How many took the bait and for how much?

  31. Pat Gorup commented on Jan 15

    “Credit card debt turned up, the home ATM turned down, inflation was rampant, real income gains non-existent, the job market mediocre. On top of that, we had much higher prices for daily requirements like Food and Energy — and still, there was total denial about how healthy retail is.”

    Now these same bozos are telling us that it’ll all be fine in the 2nd half of the year.

    Doesn’t Joe Lavorgna look like Radar from MASH?

  32. Pat Gorup commented on Jan 15

    “Where is the smart money going for the 6 – 12 month window?”

    Gold & Silver. Inflation is only going to get worse thanks to all the Central Banks’ interventions. Based on that, I’m putting my bet on what has been considered “money” for centuries and stores of value. In 1980 silver was $50 and gold was $850 for a 17 ounce to 1 ounce ratio. Today that ratio is 56 to 1. Both have moved up about 35% since September when the FED made its first cut. I see them both going up from here, allthough I see a harder time for gold at $1000 and the divergence from the ratio between the two metals as being good for silver. Plus, with silver you get the potential upside advantage over gold should the FED successfully reinflate the economy because it does better in that environment (2003-2006).

  33. Michael Donnelly commented on Jan 15

    Um Econolicious

    yea, I did, sorry my bad. But I live in PA so it didn’t matter.

    md

  34. philip commented on Jan 15

    My money is looking smart in shorts on WM and COF. These are not long term plays, so I don’t worry about inflation eating my large gains. I closed WM already (rode it from $42 to $16, then up to $19 before bailing) but COF is still bleeding into my cup (got in at $65 and it is $42 now with plenty of downside potential). BEARX is doing okay for me, though right now it is roughly equal to profits in gold since September. I think I may double down on COF. I haven’t found a good short play for England and Spain yet and I am taking free advice from all corners. Any help?

    Remember, thanks to the beauty of the market, other people’s denial is tradable. Whenever you see widespread denial in the populace that denial is reflected in the stock prices. If only I had shorted the homies when the denial was thick in the air in 2006/2007. But I learned my lesson and the banks are going to make it up to me.

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