It’s Not Just Amazon’s Fault

Guest Post by Vitaliy Katsenelson

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Retail stocks have been annihilated recently, despite the economy eking out growth. The fundamentals of the retail business look horrible: Sales are stagnating and profitability is getting worse with every passing quarter.

Jeff Bezos and Amazon get most of the credit, but this credit is misplaced. Today, online sales represent only 8.5 percent of total retail sales. Amazon, at $80 billion in sales, accounts only for 1.5 percent of total U.S. retail sales, which at the end of 2016 were around $5.5 trillion. Though it is human nature to look for the simplest explanation, in truth, the confluence of a half-dozen unrelated developments is responsible for weak retail sales.

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Americans Are Broke

Via Schiff Gold

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Retail sales unexpectedly fell again in February. It was the third straight monthly drop and the first time the US economy has seen three straight months of declining retail sales since 2012.

Sales fell 0.1% in February. Analysts had expected an uptick of 0.3%. According to CNBC, households cut back on purchases of motor vehicles and other big-ticket items, pointing to a slowdown in economic growth in the first quarter.

So, why is this happening? Peter Schiff offered a simple reason in his latest podcast.

Americans are broke.

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Retail Sales Drop 2nd Straight Month As Spending On Hookers, Drugs, & Booze Tumble

Retail sales, the lifeblood of our economy (68% of GDP), always fall two months in a row when we have full employment, tax cuts are making us richer, the economy is booming, and consumer confidence is at all-time highs. Right??

The truth is that inflation is running hot on the things we need to survive in our daily lives (energy, clothing, rent, health insurance), but inflation in wages is non-existent. Tax cuts at the Federal level are more than eaten up by tax and fee increases at the state and local level. Credit card, auto loan, and student loan debt are at all-time highs.

The delusional American consumer has bought the propaganda peddled by the politicians, Wall Street and the mainstream media and leveraged up over the last eight years to keep up with the Joneses – Again. They are tapped out. The coming recession and stock market crash will be a one two punch that provokes a lot of anger among the masses. 

Maybe a global war will distract them from their economic despair. Stay tuned.

Following a disappointing drop in January, expectations were for a 0.3% rise in retail sales in Feb but BofA was far less sanguine, warning that sales could miss because tax benefits only went to people who had withholdings reduced, not those who actually got a refund as they were delayed.

And BofA was right, Retail Sales dropped 0.1% MoM (with Jan revised up to -0.1%), falling for the second straight month for the first time since October 2015.

https://www.zerohedge.com/sites/default/files/inline-images/2018-03-14_5-31-57.jpg?itok=J9-uhTJZ

Retail Sales disappointed across the board with Ex-Auto , Ex-Auto & Gas, and Control Group all missing expectations.

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GOLDILOCKS IS DEAD

“Once you strip out the effects of the debt binge, the artificial stimulus via currency depreciation, and the fabled ‘wealth effect’ from the equity market runup, real GDP growth stripped-down to its core was the grand total of 0.7% last year. Potemkin would be proud.” David Rosenberg

It appears every president finds the religion of false economic narrative once they ascend to power. Trump never stops babbling and tweeting about the fantastic economy and raging jobs market since his election. He has embraced the stock market bubble as proof of his brilliant leadership, rather than the tens of trillions in debt propping up the most overvalued market in world history. Every president takes credit for any good news, spins bad news as good news, or blames the previous president for bad news that can’t be denied. The president has absolutely zero impact on the economy or stock market over the short term. It’s like taking credit for the sun rising in the east each morning.

The Big Lie method works wonders when you have a willfully ignorant, mathematically challenged, easily manipulated populace. I spent the entire Obama presidency obliterating the fake economic data perpetuated by his BLS, BEA and every other government agency trying to paint a rosy economic picture. I voted for Trump because the thought of Crooked Hillary as the president made me ill. Despite disagreeing with many of his economic, budgetary, and military policies during his first year in office, I’d vote for him again over Hillary in an instant. The thought of having that evil shrew running the country gives me chills.

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Retail Sales Tank: Is The House of Credit Cards About to Collapse?

Guest Post by Peter Schiff

Could the house of credit cards Americans have built be on the verge of collapse?

Earlier this week, the New York Fed released the latest data on US household debt, revealing it has grown to a record $13 trillion. Americans have been spending, but they’ve been putting a lot of it on plastic. Credit card balances grew by $24 billion in the last quarter of 2017 alone. Meanwhile, US consumers owe $1.22 trillion on vehicle loans. This can only go on for so long. And their are indications that the American credit card spending spree may be winding down.

Retail sales unexpectedly fell in January, recording their biggest drop in nearly a year.

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Retail Sales Tumble Most Since January 2016 As Gasoline, Electronics Sales Slump

So we have stock markets reaching new all-time highs on a daily basis. We also know, based on all historically accurate valuation methods, stocks are overvalued by 70% to 120%. We also know the highly manipulated GDP is lingering somewhere between 0% and 2%. We also know that real wage growth for the average American is a big fat zilch. We also know that healthcare costs, due to the Obamacare clusterfuck, are soaring at double digits for American families. We also know that rents and home prices are at record highs due to the Federal Reserve policies to prop up their Wall Street owners. We also know the Fed will raise short term rates today by another minuscule .25%.
 

The MSM and Trump narrative is that the economy is doing great because unemployment is only 4.3%. When the working age population totals 255 million and only 132 million are employed full-time and 21 million part-time, the 4.3% false narrative disintegrates. When 102 million Americans are not working, you’ve got a big problem, and propaganda spewed by the corporate media won’t fix it.

Anyone with half a brain knows this faux economic recovery has been nothing but a debt financed mirage created by the Fed, the Treasury Dept and Wall Street to continue their looting and pillaging rape of the American people. The debts are going bad, as they always do when you lend vast amounts of money to people incapable of paying the debt back. Hundreds of billions in student loan debt are bad. Now the debt implosion is hitting the auto industry. The issuance of debt has slowed dramatically and is going to contract soon.

Our economy is dependent upon consumers spending money they don’t have for shit they don’t need. Consumer spending accounts for 68% of GDP. Lenders are being forced to tighten lending standards as bad debt skyrockets to 2009 levels. What happens when lending slows down, retail sales fall, just like they did in May. Auto sales are falling. The only category showing any growth is the Amazon led internet sales. Gasoline sales plunged, but the average price was only down 2 cents from the prior month, so volume is the driving factor.

Restaurant sales and department store sales continue to plunge. Count on more bankruptcy announcements, more closings, and more space available signs in your local ghost mall.  The 10 Year Treasury began the year at 2.45%, rose to 2.63% in mid March and now stands at 2.11%. Does the 10 Year Treasury fall 50 basis points when the economy is getting stronger?

The economy is either in recession or on the verge of recession. Facts are facts and no amount of bullshit spewed by the media, corrupt politicians, or boot licking central banker academics will change the facts. How long can the powers that be keep the stock market bubble inflated? I don’t know, but I wouldn’t go near the market with my money.

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WILL TRUMP ACCEPT RESPONSIBILITY WHEN THIS SHITSHOW IMPLODES?

Donald J. Trump has taken credit for making America’s economy great again. He’s been crowing about all the jobs being created, the soaring consumer confidence and record highs in the stock market. It’s all because the Donald has inspired Americans about our glorious future.

But, a funny thing has been happening in the real world. The economy has gone into the shitter and GDP will be lucky to reach 1% in the first quarter of his presidency. The bullshit consumer confidence surveys mean absolutely nothing. Feelings don’t mean shit. What consumers do is what matters.

67% of the US economy is dependent upon Americans spending money they don’t have on shit they don’t need. And they’ve dramatically reduced that spending. If consumers are so confident, why are a record number of major retailers going bankrupt and closing 3,500 stores in 2017? Mom and pop retailers have been shuttering for years.

If the narrative about a dramatically improving housing market was true, why would furniture store sales and building material store sales be falling? They wouldn’t. It seems even the spendthrift millennials have run out of dough, as restaurant sales are in free fall. Restaurant chains have begun closing units now. It has only just begun.

The auto industry ponzi scheme has come to an end, as billions in subprime loans to deadbeats is finally coming home to roost. If you lend money to idiots with no means to repay you, the loans will go bad. Auto sales have begun to fall and will continue to fall for the next couple years, as this house of cards built on the Fed’s easy money collapses.

How in the world does anyone with two brain cells believe the average American has the ability to keep increasing their spending when their wages are stagnant, real household income is falling, and Obamacare continues to siphon what little cash they might have. There is no Obamacare replacement on the horizon, which means no tax cuts. But there is the promise of new wars across the globe. We got that going for us. 

Trump is a self proclaimed PR genius. As this economy spirals downward, followed by the stock market, I wonder if the Donald will step up and accept responsibility for the debacle when it happens. He needs to reap what he sows and accept responsibility if he is going to boast about his success in reviving the economy. Right Trumpeteers?

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The Market Has Its Head Buried Deep In The Sand

Via Investment Research Dynamics

Several “black swans” are looming which could inflict a financial nuclear accident on the U.S. markets and financial system.   I say “black swans” in quotes because a limited audience is aware of these issues – potentially catastrophic problems that are curiously ignored by the mainstream financial media and financial markets.

The most immediate problem is the Treasury debt ceiling.  The Treasury is now projected to run out of cash by mid-summer.  Of course, in the spurious manner in which the markets evaluate the next trade, July may as well be a decade away.  My best guess is that the “market” assumes that, after drawn out staging of DC’s version of Kabuki Theatre, Congress will raise the debt ceiling, probably up to $22 trillion.  Then the Fed will extend its highly secretive “swap” operations to foreign “ally” Central Banks (hint:  Belgium and Switzerland) in order to fund the onslaught of Treasury issuance that will ensue.  Problem solved…or is it?

(Note:  Plan B would be another one of Trump’s bewildering Executive Orders removing the debt ceiling.  Plan B is another form of “fiat” currency issuance)

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ABOUT THOSE “STRONG” RETAIL SALES

I get tired discrediting the MSM narrative of economic recovery, but I feel it’s my duty to set people straight. There were blaring headlines about the much better than expected retail sales in April. I find it humorous watching the government report this drivel and the MSM unquestioningly regurgitating it to the ignorant masses as retailer after retailer reports absolutely atrocious results.

Let’s dissect the bullshit report from the Census Bureau. They said retail sales went up 1.3% in April over March. Unless you delve into the actual report, you don’t know this is a seasonally adjusted number. On an unadjusted basis retail sales fell by 2%. But, for the sake of consistency I’ll use their adjusted numbers.

Total retail sales rose from $447.8 billion in March to $453.4 billion in April, an increase of $5.6 billion. That’s a 1.26% increase. Let’s breakdown our increase.

It seems $2.9 billion of that increase came from auto “sales”. That’s 52% of the total retail sales increase. So, desperate auto manufacturers with inventory piling sky high on their lots are doling out more subprime 7 year loans, 0% down leases, and offering massive rebate incentives to rid themselves of inventory. This is supposed to be some sort of positive development proving the consumer is back?

Remember those low gas prices? It seems the 30% increase in prices has boosted retail spending at gas stations by $700 million in one month and $1.7 billion over the last two months. Gas station sales increases account for another 13% of the monthly increase. So, 65% of the jump in retail sales is accounted for.

Another $550 million was produced at grocery stores, as food prices have jumped 20% since the beginning of the year. Paying more for less food is surely a sign of economic progress. Food is another 10% of the increase.

Lastly, the death of bricks and mortar retailers is further confirmed by the $900 million increase in on-line sales, as department store sales fell again.

In conclusion, the “awesome” increase in retail sales was essentially due to inflation in energy and food, with debt financed “renting” out of overpriced vehicles as the kicker. Sales at discretionary retailers like restaurants, sporting goods, electronics, and furniture stores were either flat or down. The MSM bullshit is a lie.


WHY IS THE MSM COVERING UP RECESSIONARY DATA?

The Census Bureau put out their monthly retail sales report this morning. During good times, the MSM would be hailing the tremendous increases as proof the consumer was flush with cash and all was well with the economy. Considering 70% of our GDP is dependent upon consumer spending, you would think this data point would be pretty important in judging how well Americans are really doing.

It’s not perfect, because the issuance of debt to consumers to purchase autos, furniture, appliances and electronics can juice the retail sales numbers and create the false impression of strength. That’s what has been going on with auto sales for the last two years.

The retail sales figures have been propped up by the issuance of subprime auto loans to deadbeats, 7 year 0% interest loans to good credit customers, and an all-time high in leases (aka 3 year rentals). Despite this Fed induced auto loan scheme, retail sales have still been pitiful, as the average American has been left with stagnant wages, 0% interest on their minuscule savings, surging rent and home prices, and drastic increases in their healthcare costs due to Obamacare.

The retail sales for March, reported this morning, were disastrous and further confirmed a myriad of other economic indicators that the country is in recession. GDP for the first quarter will be negative. And this time they can’t blame it on snow in the winter. They have already doubly seasonally adjusted the figures, and they will still be negative. Retail sales in the first quarter were atrocious. It might make a critical thinking person question the establishment storyline of solid job growth being peddled by politicians and their MSM mouthpieces. If people had good paying jobs, they would be spending money.

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Retail Sales Suffer Biggest 2-Month Drop In A Year After Huge Negative Revision

Retail sales always fall two months in a row when jobs are growing strongly – according to Obama and his minions. Right? Last month’s positive report was “adjusted” to a decline. Do you need any more proof that government reported numbers are complete and utter bullshit? The purpose of seasonally adjusting bad retail sales numbers to a strong gain last month, was to stop the stock market from falling, which it was doing at the time. Mission accomplished. You just bury the lies in the next press release.

If you strip out the subprime debt goosed auto sales (rentals), you have retail sales up an entire 2.1% over last February. As the MSM mouthpieces fail to mention, last February was bitterly cold with huge snowstorms across the nation. This year was mild, with virtually no bad storms. This makes the year over year change even more pitiful. With real inflation above 2.1%, real retail sales are actually falling year over year. That always happens during an economic recovery. Right?

We are in the midst of a recession for the average person. Any gas savings have been siphoned off by the Obamacare abortion. The government also reports virtually no medical expense related inflation. That’s a hoot. The lies will keep coming because the government thinks the ignorant masses won’t figure it out. It seems the increasing throngs of Trump voters have figured it out. This sucker is going down.

Tyler Durden's picture

Thanks to dramatic downward revisions (from “resilient” historical data which we pointed out were entirely anomalous at the time and due entirely to seasonal adjustments) retail sales have dropped 0.54% in the last two months – the biggest sequential drop in a year.

While the YoY change rose from +3.0% to +3.1%, it remains below historically-recessionary levels and given the revisions suggests Q1 GDP growth markdowns are on their way with sales down MoM for every cohort from gas stations to furniture.

Retail Sales down most in a year:

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LIES, DAMN LIES, & BLS STATISTICS

“There are three types of lies — lies, damn lies, and statistics.” ― Benjamin Disraeli

It’s my favorite day of the month. The Bureau of Lies & Scams issues their double seasonally adjusted, massaged to provide a happy ending, birth death adjusted unemployment propaganda, designed to keep the masses in the dark about their own dire financial circumstances. Even though the equally manipulated GDP is at 1% or below, retail sales are plunging, corporate profits plummeted by 15% in the 4th quarter and Challenger & Grey corporate layoff announcements were up 42% in January versus last year, our fraudulent friends at the BLS announced glorious employment figures this morning.

The Establishment data that gets all the headlines blared that 242,000 net new jobs were created in February. Of course, 129,000 fake birth/death jobs were factored into that number. Anyone with a functioning brain (excludes Wall Street economists, CNBC shills, and any government apparatchik) knows that more businesses have been closing than opening for the last four years as Obamacare and government solutions destroy the economy. Rather than adding 129,000 jobs, small businesses likely subtracted 50,000 jobs in February. That would put the true number at about 60,000.

In a shocking coincidence, Trim Tabs, a privately run independent company that monitors actual real time payroll withholding tax info issued a report two days ago which said the number of new jobs created in February was between 55,000 and 85,000, based on actual withholding tax data. If you are employed, payroll taxes are automatically extracted. This data cannot be manipulated by the government propagandists. It reveals the truth. No seasonal adjustments, tweaks or phantom jobs added. It’s pure tax data.

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The Curious Case Of The “Strong” January Retail Sales: It Was All In The Seasonal Adjustment

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LIVING A LIE

“Above all, don’t lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others. And having no respect he ceases to love.” –  Fyodor Dostoyevsky, The Brothers Karamazov

The lies we tell ourselves are only exceeded by the lies perpetrated by those controlling the levers of our society. We’ve lost respect for ourselves and others, transforming from citizens with obligations to consumers with desires. The love of mammon has left our country a hollowed out, debt ridden shell of what it once was.  When I see the data from surveys about the amount of debt being carried by people in this country and match it up with the totals reported by the Federal Reserve, I’m honestly flabbergasted that so many people choose to live a lie. By falling for the false materialistic narrative of having it all today, millions of Americans have enslaved themselves in trillions of debt. The totals are breathtaking to behold:

Total mortgage debt – $13.6 trillion ($9.9 trillion residential)

Total credit card debt – $924 billion

Total auto loan debt – $1.0 trillion

Total student loan debt – $1.3 trillion

Other consumer debt – $300 billion

With 118 million occupied households in the U.S., that comes to $145,000 per household. But, when you consider only 74 million of the households are owner occupied and approximately 26 million of those are free and clear of mortgage debt, that leaves millions of people with in excess of $200,000 in mortgage debt. Keeping up with the Joneses has taken on a new meaning as buying a 6,000 sq ft McMansion with 3% down became the standard operating procedure for a vast swath of image conscious Americans. When you are up to your eyeballs in debt, you don’t own anything. You are living a lie.

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Retail Sales: It’s Going To Be A Slaughter

Guest Post by Investment Research Dynamics

The Goldman Sachs ICSC chain store sales plunged 6.3% for the week ending December 5 (measured through Saturday each week).  The index measures same-store sales for retail chains.   A small decline is expected, as this is the week that follows Black Friday week. But I pulled up the data from last year and the same metric declined only 1.8%.  And, in 2013 chain store comp sales actually rose 1.5% for the week following Black Friday week.

The economy is collapsing.  This is evident from the ongoing crash in commodities, especially the price of oil and natural gas.  The consumer is tapped out.   There’s a law of economics called the Law of Diminishing Returns.   It says that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.

Traditionally this law would apply to production and manufacturing.  But in an economy based on the digital printing press, this law applies to money printing and credit creation. At a certain point, the ability of money printing and credit creation reaches a limit at which it can no longer stimulate consumption.  Consumption of homes, cars and discretionary purchases.

Retail sales this holiday season will reflect this law as it applies to retail spending.   We’ve already seen credit card data from Bank of America that indicates a 10% drop in spending for the November holiday season for through the first three weeks.  Goldman’s chain store sales indicator reinforces this stunning fall-off in holiday spending.

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Spending Was At An All Time Low For Black Friday And Corporations Lost Billions

Heres-Why-Americans-Should-Rename-Thanksgiving-to-Black-Friday-Eve

For years, Black Friday brawls and rampant materialism on the day after Thanksgiving have become a sort of twisted American celebration. However, each year the excitement continues to die down as people reject the Black Friday antics and instead do their shopping online or on other days. According to a survey by the National Retail Federation, Black Friday attendance was down over 3%, from 58.7% last year to 55.1% this year.

The survey noted that the average shopper was expected to spend $380.95, which was down from $407.02 the previous year. According to the group’s estimates, sales slipped from $57.4 billion to $50.9 billion.

“A strengthening economy that changes consumers’ reliance on deep discounts, a highly competitive environment, early promotions, and the ability to shop 24/7 online all contributed to the shift witnessed this weekend,” NRF president and CEO Matthew Shay said in a statement.

People have begun to change how they feel about Black Friday, with some deciding to support local businesses instead of large corporations, and others deciding to take the day off. As we reported earlier this month, outdoor and sporting goods store REI gave their employees a paid day off on Black Friday, urging them to spend a day out in nature.

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