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The Idea That US Consumer Is Resilient Is A Myth

Real Retail Sales Ex Gasoline Per Capita - Click to enlarge

Real Retail Sales Ex Gasoline Per Capita – Click to enlarge

The mob is only concerned with how top line retail sales did this month.  They’re really looking at inflation, driven by the spending of the  top 10%, not growth in the volume of sales, and not broader growth in real demand. In breaking out per capital real retail sales and comparing that figure with total sales it becomes apparent that the majority are buying less, not more. The idea of the “resilient US consumer” is a myth. Only the top 10% is resilient. Most Americans are losing ground and spending less.

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Real retail sales excluding gasoline per capita for October 2012 was $631.81 in 1982 constant dollars. That was just 1.1% above the October 2011 level. Compare that to the 3.5% gain in total real retail sales ex gas. These numbers make clear that somebody is spending more, but it’s not the majority of Americans. Either that, or the census bureau can’t estimate monthly inter-census population very well. That’s what the per capita estimate is based on.

This number stands 6% above the level of 3 years ago at the bottom of the recession, but 7.2% below the peak October level in 2006.   At the bottom of the 2002 recession October spending was $670.14 per person. That means that on average,  people today are spending 5.7% less than they were in that recession 10 years ago. Even though there has been some recovery since 2009,  most Americans have lost purchasing power over the past decade. The economy is technically growing but most Americans are falling farther and farther behind.

Looking at this chart and considering this data, ask yourself how the Fed’s money printing, which is likely to foment yet another disastrous bubble in some segment of the economy, is going to help more Americans get good paying jobs that will enable them to halt their long term slide in their standard of living.  The last bubble did not do that. In fact, it made matters worse. The next one is likely to do the same.

For more charts and a complete analysis of Retail Sales, see the permanent chart page on Real Retail Sales, from which this update is excerpted.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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