This Author will wait awhile to explain his violation of the Economist Code. I will first state that March Sales were not simply bad, they were dismal. Consideration of the normal largesse of purchases (Sales Ticket size) provides a statement that We have finally seen the impact of rising Gas Prices. All Store Chains witnessed about the same loss of Volume in Sales, even Walmart who continues to lower Product Prices to maintain Sales; but only with ever-shrinking margins. Nonessential Sales are disappearing from the Shopping Carts.
Sweet Crude Oil price continues to advance, and Why? The greatest reason comes from Americans remaining attached to their Driving milage, which is also slowly advancing even under sharp Gas Price increases. A second major reason lies in Investors abandoning the Stock Market, for a speculation in what they believe is a sure thing--Oil. This attitude is also propelled by decreasing Unemployment numbers, and fears that the Fed will continue to raise Interest rates to forestall Inflation. The Total leads to one conclusion which is accurate: The P/E ratios are ridiculous under the current volume of Sales, the latest Runup in Stock prices destroyed the viable base for stable Returns.
The Economic Picture would look unbelievably better if the DOW stood at 8000. P/E ratios would be fantastic under such circumstances. Speculation funds would abandon Oil and Gold, and run back to the Stock Market. 2006 may see the Foreign Products Sales Bubble burst! What could this mean to the American economy? Not much actually. The Speculators in the Markets will lose their windfall gains made since the Tech Bubble burst. The Paper manupilators would go back to buying Chevy's and Fords instead of Mercedes. The Fed would drop its Interest rates, and Production Managers would go back to cutting Production Costs, instead of Staff, realizing that actual Production is cheaper here in the States; with an unbelievable strengthening of the Dollar. The final humor lies in the fact Retail Sales is not likely to drop over 3% from its current levels. lgl