The headlines in the MSM are blaring that retail sales soared in August, up 0.9% over July. I guess the average American is flush again with all those new jobs being created by Obama. They must have splurged on those back to school sales. I’m sure JC Penney sales took off.
Here is a link to the press release:
Let’s look beneath the headlines and see why retail sales SOARED in August:
- Retail sales grew by $3.6 billion in August, over July.
- The “growth” was driven by two retail categories. Gasoline sales grew by $2.4 billion in one freaking month – a 5.5% one month increase. Motor vehicle sales increased by $1 billion. I use the term sale loosely, as the car dealers are giving away their vehicles with 0% seven year financing to deadbeats. That ain’t a sale. So, 97% of the retail sales increase is from borrowing cars and filling them up with gasoline. Sounds like a fantastic retail surge.
- Sales actually fell at clothing stores and food stores. That is surely a sign of a booming economy. Remember, August was back to school month.
- Even the Wal-Mart category of merchandise stores saw sales decline.
- The year over year data is just as bad. Retail sales were $18 billion above last year, a 4.7% increase. Of course, inflation is above 5% so real retail sales are negative.
- The booming retail categories over last year are:
- Motor vehicle giveaways up $7 billion over last year.
- On-line retail up $4 billion
- Restaurants up $3 billion
- Gasoline up $1 billion
- Food stores up $1 billion
When I look at the monthly and yearly figures in this report I see a consumer collapsing. The rising costs to fill your gas tank is sapping whatever spending you may have planned. The medicine that Ben Bernanke just prescribed will drive gas prices higher, food prices higher and will kill the patient. As retail sales implode further, more retailers will go under, more jobs will be lost, more malls will default on their loans, and more pain will be instore for the average American.
But don’t worry your head about such things. Buy stocks and root for your favorite contestant on The X Factor or The Voice.