Horrible News: Retail Sales Plummet
publication date: Jan 14, 2009
I spend more time reading, listening and watching mainstream media than I should. I do it in part to know what typical people are being exposed to on a daily basis. I inevitably find shoddy reporting, inaccurate stories, hype, etc. There is some stuff, for sure. But, I inevitably get annoyed but then I am inspired to write something which hopefully helps folks to cut through the clutter.
The AP headline, "Retail sales plummet 2.7 percent in December" got my attention.
And how about this lead paragraph:
"Retail sales plunged far more than expected in December, a record sixth straight monthly decline as consumers were battered by a recession, a severe credit crisis and soaring job losses, none of which are likely to ease anytime soon."
Wow - no hedging here - things are awful and gonna stay that way!
Plummet, plunged, record decline, battered by recession, severe credit crisis, soaring job losses...none of which are likely to ease ANYTIME SOON...
Buried in the story is this vital fact: significantly lower gas prices led to retail gas station sales dropping 15.9 percent in December. With gas under $2 per gallon (versus over $4 per gallon just last summer), we're spending a lot less to fill up cars with each passing month. Do you feel bad about paying less than half of what you were paying just last summer for gasoline?
In fact, excluding the "horrible" impact of falling gas prices from retail sales cuts the drop in December retail sales in half! In other words, December retail non-gasoline sales dropped just 1.4 percent.
Electronic and appliance store sales fell just 1.0 percent. Furniture and home furnishing store sales declined 1.8 percent. Motor vehicle and part dealer sales were down just 0.7 percent.
Global stock markets sold off sharply on the December retail sales numbers and accompanying news stories, including APs. Did you know that AP is in:
- 1,700 U.S. daily, weekly, non-English and college newspapers.
- 5,000 radio and television outlets taking AP services.
- 850 AP Radio News audio affiliates.
- 550 International broadcasters who receive AP's global video news service, APTN, and SNTV, a sports joint venture video service.
- 121 number of countries served by AP
Yes, we're in a recession and economic activity is declining. But, look beyond the hyperbole at the actual data and see what's going on and why. It's irresponsible to say, "Retail sales plunged far more than expected in December, a record sixth straight monthly decline as consumers were battered by a recession, a severe credit crisis and soaring job losses, none of which are likely to ease anytime soon."
While our country's economic history goes back more than two centuries, the Commerce Department has only been tracking monthly retail sales since 1992! So, let's not talk about breaking records. And saying that this litany of problems isn't going to ease anytime soon is horrendous. Has AP gotten into the economics forecasting business?
Memo to AP: By most every important measure, the credit crisis has already greatly eased (and interest rates are quite low). In recessions, which are defined by at least two consecutive quarters of declining economic activity, retail sales fall. So, sixth straight months of retail sales declines is hardly dramatic record news worthy of record setting status. Investors selling stocks based on this type of news reporting will regret their decisions down the road.