US Retailers Are ‘Singing The Blues’

US Retailers Are ‘Singing The Blues’

$DIA, $SPY, $QQQ, $VXX

Retailers are singing the blues and the soft October retail sales report supports their crying songs.

General merchandise demand was off, but that might be traced to falling consumer costs as in the cost of motor fuel.

The drop in automobile and light truck sales is one of those occurrences that is rarely tallied.

Perhaps consumers are still shopping but paying less.

That would show up in the inflation-adjusted consumption numbers.

The University of Michigan’s (MSI) mid-month reading of consumer sentiment rose, raising hopes that households will feel good about shopping for those holiday gifts.

The Fed may be hoping for a sign that inflation will accelerate, but it was not seen  in the October PPI (Producer Price Index). Prices fell once again and you have to look long and hard to final any major grouping that posted a positive number. There are over 50 special groupings reported and just 3 were up.

Telling in the report was the decline in services costs. This had been the component that had been holding up, but not lately. Wholesale and retail margins are being squeezed, causing costs to decline.

A positive sign was that trucking margins improved, which may be indicating a stronger economy.

The retail sales report will be read as a warning that the economy is not strengthening.

Prices matter, so we wait until we see the inflation-adjusted consumption data, which includes services. Participants may focus on goods, but 67% of the consumer’s Bucks goes to services.

There is something fundamental going on with the American consumer, in that people have learned they do not need all those things they once thought they needed. There are very few must haves and more can live without’s. Hence, the retailers are suffering.

That is seen in the savings rate, which since the end of the Great Recession has been running well above what we saw during the last expansion. .

I wonder what the FOMC members are thinking.

Friday’s US major market indexes finished down: DJIA -202.83 at 17245.24, NAS Comp -77.20 at 4927.88, S&P 500 -22.93 at 2023.04

Volume: Trade was above average with about 950-M/shares changing hands on the NYSE

On the week: The US stock market ended a down week on a down note after the release of some disappointing economic data and weak retail earnings. The S&P 500 lost 1.1%, widening this week’s decline to 3.6%, the NAS Comp (-1.5%) under performed to end the week lower by 4.3%.

• NAS Comp +4.1% YTD
• S&P 500 -1.7% YTD
• DJIA -3.2% YTD
• Russell 2000 -4.6% YTD

Have a terrific weekend.

HeffX-LTN

Paul Ebeling

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