The poor retailers

 

Shrinking food stamp benefits for families mean yet another challenge for retailers

Correct take: Exuberance about retail (AP) leaves out that consumers are borrowing big to finance it

Real retail in Mar 2019 y/y is growing at less than half the rate it was in Aug 2018

"Retail and Food Services Sales" falls 0.94% in December, which is cautionary for GDP

The drop is not that odd for a December.

In December 2007 we had a drop of 0.6%, in December 2008 a drop of 2.5% (part of the big whopper decline of 12.25% between summer 2008 and March 2009), and in December of 2011 a drop of 0.3%.

The drop in January 2014 when GDP went severely negative was 1.26%, so the 0.94% magnitude this time does not augur well for 4Q2014 GDP.

Real Retail Sales Still Remain Below The 2006 Peak

Real retail sales still remain below the December 1, 2006 peak of $180.016 billion. The latest report of real retail sales for November 1, 2012 puts them at $178.51 billion.

Graph and data here.

We still remain in a consumption depression nearly six years since the onset despite extending the Bush tax cuts for two years beyond their original expiration date, and despite the first ever emergency reductions to the payroll tax, rolled back 32% for both 2011 and 2012 from 6.2% of each paycheck to 4.2%:

"[F]or the economy as a whole the payroll tax cut amounted to about $112 billion in 2012 – or the equivalent of at least $300 for each person in the US," reports the Christian Science Monitor, here.

Given the 100% propensity to spend everything in a paycheck, the expiration of the payroll tax cut will remove that sum from current retail spending levels. And going back to the Clinton era tax rates in less than two weeks, on January 1, 2013, will mean transferring about $235 billion annually from taxpayers to federal coffers, according the Congressional Budget Office, as discussed here.

Together that's a theoretical annual hit to spending by the American people of nearly $350 billion.

Yet Democrats cry Forward! to these tax rates of the past despite the damage they are likely to cause.

We're not going to get over the hump that way.

Real Retail Sales Still Have Not Bested The 2006 Peak

Data through September 2012, here.