Consumer is in Trouble – Russ Winter

Presented without comment:

Redbook Chain Store Sales: +1.6% Y/Y vs. +1.8% last week. The 1.6% is the slowest growth rate since mid-Nov. ICSC Retail Store Sales: -1.0% W/W, vs. -1.5% last week.+2.0% Y/Y vs. +3.5% last week. Higher payroll taxes, post-holiday and cold temperature negatively impacted store sales

Jan. Consumer Confidence: 58.6 vs. 65.1 expected, 66.7 in Dec. (revised).

More perverse lousy numbers followed by a rally to new highs in Amazon (AMZN): Q4 EPS of $0.21 misses by $0.07. Revenue of $21.27B (+27% Y/Y) misses by $1 billion and guides 1Q revenue lower by $1 billion.

 

 

Lee Adler on real retail sales ex gasoline:

When analyzing retail sales, I’m interested in the actual volume of sales, not the inflation skewed dollar total. To get to the kernel of the matter, I look at the real, not seasonally finagled retail sales, adjusted for top line CPI inflation (not core which normally understates the actual).  Then I back out gasoline sales, which are a substantial portion of total retail sales. Gasoline sales distort total retail sales higher when gas prices are rising, when they actually act like a tax on disposable income and reduce non-gasoline sales . On the other hand, when gas prices fall, the top line total retail sales figure will understate any gains in the volume of sales.  Gasoline sales typically account for around 12% of total retail sales. By subtracting gas sales and adjusting for inflation, the resulting number represents the actual volume of retail sales.

The year to year change  in real retail sales, ex gasoline prices, and adjusted for inflation in December was a decline of 0.26%. This compares with a year to year gain of 2.8% in November, and it ends a string of year to year gains going back to January 2010.

 

Gasoline futures are up 42 cents since mid-December:

 

Chicken wing inflation:

Delinquency rates on student loans made in the last 2 years have reached the “unsustainable” level of 15%, says FICO. In the 2005-2007 period it was 12.4%, but average student loan debt now is nearly 60% higher (at $27K) and the job market far softer. These loans have zero collateral.

From Zero Hedge: The Lewis Turning point: China’s National Bureau Statistics announced that the share of population aged between 15 and 60 years old declined for the first time in 2012 by 0.6ppt to 69.2%.

 

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