Retail Sales droppec 0.2% after Gasoline was removed. Does this tell Us something?
It actually tells Us a number of things. Inventories have grown approx. 1.5% over the last two months, so exprected return of Demand did not materialize. This Author is an advocate of plateau Consumptions patterns: there exists a Minima and Maxima mentality in the minds of Consumers, who will not alter Expenditure patterns to Price changes until a certain point is reached either higher or lower. This is what makes Consumer expectations so important; a Price range close to the Maxima with expectation the Price rise will continue, will engage a sharper reduction in Consumption than a normal Economic modeling sampling prediction.
The Retail Sales drop may also entertain longterm implications as well. The Sales may not come back. Why? Consumers let immediate circumstances affect longterm Consumption patterns. Mortgage Debt is at alltime Highs, as is Consumer Credit. The rise in Pricing, both Across-the-Board and volitile Products, can lead to a Consumption pattern designed to pay down debt. Oil have just exceeded $78/barrel, with futures trading above $80/barrel. Consumers may turn in Consumption conservatives.
Another factor has entered the matrix as well which is Population Growth. Adverse Economic data, combined with already-high debt, will constrict the number of Pregnancies. It does not help that fertility drugs (radically more expensive) has produced a record number of Premies and Twins (very much an increased Cost factor). One advantage of the Baby Boomers to Economic performance is the increase in Death rates; Seniors being extemely excessive Consumers, if only in health care provision. Baby Boomers will likely await the death of their parents before their own death, but Retail provision of health care will decline with every death. The end-result, though, may be a reduction in Retail Sales faster than the actual shrinkage of Population. lgl