Real e Finance means business
The 'Helicopter Economics
Investing Guide' is meant to
help educate people on
how investing choices in
the current economic
environment. We have
coined this term to
describe the current
monetary and fiscal
policies of the U.S.
government, which involve
unprecedented money
printing. This is the official
blog of the New York
Investing meetup.
Investing Guide' is meant to
help educate people on
how investing choices in
the current economic
environment. We have
coined this term to
describe the current
monetary and fiscal
policies of the U.S.
government, which involve
unprecedented money
printing. This is the official
blog of the New York
Investing meetup.
____________________________________
____________________________________
________________________________________________________________
The truth and nothing but...
Retail Sales and
Employment Not
as Good as First
Reported, Jan 12,
2012
Employment Not
as Good as First
Reported, Jan 12,
2012
There has much cheerleading in the mainstream press lately about the
improving employment situation and strong 2011 holiday retail sales. Just
released figures indicate it may have been much ado about nothing.
Retailers depend on the holiday season for their yearly profits. Major efforts
were made in November to get people to start buying early. This worked
and retail sales were up 0.4% during the month. Strong early numbers don't
necessarily mean overall numbers will be greater however. It can simply
mean that buying activity was frontloaded and the later numbers will then
be weak. This is exactly what happened. Retail sales were up a whopping
0.1% in December (retail sales are not adjusted for inflation, the number
would be negative if it had been).
Looking inside the report shows how incredibly weak the consumer is.
Excluding autos, which are highly volatile, retail sales were 0.2% lower --
the first drop since May 2010. Core retail sales, which exclude autos,
gasoline and building materials were down 0.1%. Even though it was the
height of the holiday buying season, spending at electronic and appliance
stores was down 3.9% and spending at department stores was down 0.2%.
Once again, if the numbers had been adjusted for inflation they would
have been even worse.
So how come U.S. consumers aren't spending more now that the
employment situation is supposedly getting better? Well, maybe it's
because it isn't. The big news lately has been the declining weekly claims
which have fallen below the traditional 400,000 per week that indicates
recession. However, for the first week of 2012 they came in at 399,000 --
back at recession levels. This was up from the 372,000 reported the
previous week (three states including mega-sized California didn't send in
their claims numbers for this report). Of course, the mainstream press blew
the trumpets about the "good", but highly questionable, 372,000 number,
just as it did for the 200,000 jobs that were allegedly created in December
2011.
Among these jobs were 42,000 new messenger positions. While it's more
likely that 42,000 messengers were hired in December than 42,000 nuclear
physicists, that doesn't mean it is believable. Messengers work in a field
with declining employment. The December jobs report has been criticized
as having "statistical adjustment" problems. Non-statisticians generally
refer to this as lying about the numbers. Of course, the appearance of
suddenly improving economic news (not to be confused with an economy
that is actually improving) at the beginning of a presidential election year
should not be surprising.
As the election season heats up, there will be a desire for the government
to report that economic conditions are better than they actually are. This
does not mean the news will necessarily be good, it will just be better than
it actually is. Expect the bad news to come out after the November
election. Until then, invest with caution.
Disclosure: None
Daryl Montgomery
Author: "Inflation Investing - A Guide for the 2010s"
Organizer, New York Investing meetup
http://investing.meetup.com/21
improving employment situation and strong 2011 holiday retail sales. Just
released figures indicate it may have been much ado about nothing.
Retailers depend on the holiday season for their yearly profits. Major efforts
were made in November to get people to start buying early. This worked
and retail sales were up 0.4% during the month. Strong early numbers don't
necessarily mean overall numbers will be greater however. It can simply
mean that buying activity was frontloaded and the later numbers will then
be weak. This is exactly what happened. Retail sales were up a whopping
0.1% in December (retail sales are not adjusted for inflation, the number
would be negative if it had been).
Looking inside the report shows how incredibly weak the consumer is.
Excluding autos, which are highly volatile, retail sales were 0.2% lower --
the first drop since May 2010. Core retail sales, which exclude autos,
gasoline and building materials were down 0.1%. Even though it was the
height of the holiday buying season, spending at electronic and appliance
stores was down 3.9% and spending at department stores was down 0.2%.
Once again, if the numbers had been adjusted for inflation they would
have been even worse.
So how come U.S. consumers aren't spending more now that the
employment situation is supposedly getting better? Well, maybe it's
because it isn't. The big news lately has been the declining weekly claims
which have fallen below the traditional 400,000 per week that indicates
recession. However, for the first week of 2012 they came in at 399,000 --
back at recession levels. This was up from the 372,000 reported the
previous week (three states including mega-sized California didn't send in
their claims numbers for this report). Of course, the mainstream press blew
the trumpets about the "good", but highly questionable, 372,000 number,
just as it did for the 200,000 jobs that were allegedly created in December
2011.
Among these jobs were 42,000 new messenger positions. While it's more
likely that 42,000 messengers were hired in December than 42,000 nuclear
physicists, that doesn't mean it is believable. Messengers work in a field
with declining employment. The December jobs report has been criticized
as having "statistical adjustment" problems. Non-statisticians generally
refer to this as lying about the numbers. Of course, the appearance of
suddenly improving economic news (not to be confused with an economy
that is actually improving) at the beginning of a presidential election year
should not be surprising.
As the election season heats up, there will be a desire for the government
to report that economic conditions are better than they actually are. This
does not mean the news will necessarily be good, it will just be better than
it actually is. Expect the bad news to come out after the November
election. Until then, invest with caution.
Disclosure: None
Daryl Montgomery
Author: "Inflation Investing - A Guide for the 2010s"
Organizer, New York Investing meetup
http://investing.meetup.com/21
© 2011 realefinancemedia.corp - all rights reserved
 | |  | |  | |  |
________________________________________________________________
