Finance
Retail Sales & Payrolls: Don't Panic!
The headlines sure are shocking this morning! Retail sales plunge again in November! Down 1.8% from October and 7.4% from November 2007 !!! The sky is falling, details at 11pm! Unemployment claims surge again!Well stop and take a deep breath. Now we are not going to tell you things are peachy for the economy but we will try to bring some sanity to the headline numbers. Lets start with the retail sales figure as here we use the figures from the release. On a seasonaly adjusted basis (we aren't fond of these but its the only way to compare month on month):
US Retail Sales as Reported 12/12/08
| ItemNov 08 | Oct 08 | Nov 07 | |
|---|---|---|---|
| Total Sales | $355,655 | $362,035 | 384,099 |
| less Gas Stations | $32,653 | $38,274 | $41,875 |
| Net | $323,002 | $323,761 | $342,224 |
| Change | -0.23% | -5.62% | |
| less Autos | $51,637 | $53,736 | $71,461 |
| Net | $271,365 | $270,025 | $270,763 |
| Change | +0.50% | +0.22% |
Wait! You mean.. taking out gas station sales leaves November nearly flat compared to October? Who would have thought plunging gas prices might overstate the decline? And.. oh no.. this can't possibly be! Ex-gas stations and Ex-Autos... retail sales were actually up not just on the month but the year? Shocking! Of course lost sales in the auto industry is not good either, but by excluding them we see the rest of the economy is flat but not off a cliff. (This should be a lesson too on the upside - things were never quite as great as made out.)
As to the non-farm payroll and weekly claims reports - two points come to mind. First, there had been a large disconnect between the job losses over the past year as reported by the household survey (used for the unemployment rate) and the non-farm, corporate supplied data - roughly 2 million jobs. We suspect much of the recent drops (including revisions) to the more official non-farms data reflect a catching up and ties in with the recent increases in claims, our second point. Its our opinion that much of the recent jump in claims and the non-farm are because both (former) employees and employers were not yet able to file for unemployment insurance or report jobs as lost until severance payments had run out. Thus we think much of this large bump relates to the many cuts announced last spring and summer and is not necessarily an acceleration in the present time frame. Others announced layoff plans this fall and those may still be in the data pipeline, so the headline numbers are likely to grow but we may be closer to the end than the beginning of the major layoffs.
