Retail Sales Decline: Harbinger of Recession?

The total nominal increase in July 2006 Retail Sales of $368.405 billion was 3.9% from July 2005's $354.414 billion. However, adjusting for inflation using the Bureau of Labor Statistics Consumer Price Index increase of 4.3%, this reduces the "real" Retail Sales change to -0.4%. However, the figures are even worse if gasoline station sales are subtracted. Subtracting July 2006's $43.918 billion in gasoline sales from the total nominal Retail Sales gives $327 billion. Subtracting July 2005's gasoline station sales from the total nominal Retail Sales (from July 2005) gives $319.53 billion. The difference between the July 2006's retail sales (ex. gasoline station) and July 2005's retail sales is only 2.3% in nominal (non-inflation-adjusted) dollars. Adjusting for inflation using the CPI increase of 4.3% puts the total at a -2.0%. In other words, excluding gasoline station sales, inflation-adjusted Retail Sales declined 2.0% from July of 2005.

This can be seen from the Retail Sales chart below copied from the U.S. Bureau of Economic Analysis report on Retail Sales



General Merchandise Sales, which make up the biggest component of Retail Sales, showed a nominal increase in dollar sales of 4.3%. (underlined in blue on the chart above.) Again, this is exactly the same as the increase in the Consumer Price Index of 4.3%. Thus, the real change in General Merchandise Sales since July of 2005 is 0.0%. In other words, there has been NO growth in General Merchandise Sales since July of 2005.


The declining inflation-adjusted Retail Sales numbers are an ominous sign for the economy. They're even more concerning when gasoline station sales figures are not included, which leaves the remaining total for Retail Sales at 2% less than the previous July. Even with increased borrowing, consumers spending is declining. Since consumer spending is 70% of GDP growth, it makes further GDP growth difficult, if not impossible. With consumer borrowing ability expected to fall even further, consumer spending will likely decline further as well. Real wages have continued their steady decline since December 2002. Median real family income has declined every year since 1999. With decreasing consumer spending and decreasing consumer demand, labor demand can be expected to decline even further. The declining labor demand will result in further declines in both wages and employment, reducing consumer spending power even further.

Several noteworthy economists are suggesting a recession is on the way. Paul Krugman has discussed this in his most recent article titled Intimations of Recession. Economist Nouriel Roubini, former member of Clinton's Council of Economic Advisors, has put the likelihood of Recession at 70% by the end of 2006. Another article from the Daily Reckoning has also laid out a strong case for an impending recession. All of these sources have provided a considerable amount of evidence to support their predictions. It appears that our "faith-based" economy is running out of steam. It can no longer be kept afloat by the hot air from the Housing Bubble and the alternate reality creation of the NeoCon-Artist spin machine.


unlawflcombatnt

EconomicPopulistCommentary

Economic Patriot Forum

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The economy needs balance between the "means of production" & "means of consumption."

While we may be going into a recession things have not been good for workers for some time now. A recession only means corporate profits will not be as good and GDP will not grow as it normally does. Wages have tended to be stagnant for some time now even though profits have been up over the past couple years. The price of goods continue to rise which means purchasing power is actually lower. The economy has been good for those that own but bad for those that work. The sad fact is that the strength of the economy is measured by how well companies do rather than how well the average citizen is doing.

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Up there in the immensity of the Cosmos, an inescapable perception awaits us. National boundaries are not evident when we view the Earth from space. Fanatical ethnic, religious or national chauvinisms are a little difficult to maintain when we see our planet as a fragile blue crescent fading to become an inconspicuous point of light against the bastion and citadel of the stars. -Carl Sagan

Its hard to gauge things in the current global economy.To many random factors as of late.

How do you factor in the threats and current terroristic plots into viable figures. look at the current pakistan/english terror foiled plot and what it could have done to the economies globally.

Look at irans threats to cut oil etc. Many factors seem up in the air and I feel alot of people are hedging their activities do to this. Oil futures etc i dont feel are at realistic levels do to the enviorment to much crazed speculation.

I think in 1 to 2 months things will calm down and we can see what more realistic figures are.

The world economy I feel has been resilent since 911 and very robust. We USA and the world bounced back pretty well in a few short years. look at the job numbers and the us economy is very good yet public perception is the opposite. I feel public perception is this Undetermined value that is affecting things. Reality and speculation have not meshed yet.

I'm no expert and this is all my own theories im a country bumpkin but I think im a realist in the end.

Just I think facts and figures on paper dont tell the whole current story is all

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[img]http://www.vosaclub.org/uploads/1013716823439885ec82c03.jpg [/img]

[B]Hardcore Conservative ![/B]

I said Conservative not necessarly Republican or Democrat. Liberals are in both of those parties.

[I]I'm a country Bumpkin Im not as articulate or educated as some here. But I dont have on blinders when I read.[/I]:) :001_tongu

To take one economic indicator as a stable predictor of future conditions is folly.

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"Send a salami to your boy in the Army" Jerky Boys.

Oh hell another Tax cut for the wealthy will fix everything!

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[FONT=Times New Roman][SIZE=4]"When fascism comes to America, it will be wrapped in the American flag." -- Huey Long, Senator (D-LA)[/SIZE][/FONT] :eek:

[img]http://webpages.charter.net/disenfranchised/Pictures/cartoon-flood.jpg[/img]

I believe the tax cuts have stimulated the economy

/hides from the usual litany of Liberal rhetoric

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[img]http://www.vosaclub.org/uploads/1013716823439885ec82c03.jpg [/img]

[B]Hardcore Conservative ![/B]

I said Conservative not necessarly Republican or Democrat. Liberals are in both of those parties.

[I]I'm a country Bumpkin Im not as articulate or educated as some here. But I dont have on blinders when I read.[/I]:) :001_tongu

One born every second.

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[FONT=Times New Roman][SIZE=4]"When fascism comes to America, it will be wrapped in the American flag." -- Huey Long, Senator (D-LA)[/SIZE][/FONT] :eek:

[img]http://webpages.charter.net/disenfranchised/Pictures/cartoon-flood.jpg[/img]

From http://www.moneychimp.com/articles/econ/tax_cuts.htm :

It didn't look partisan to me but I am happy to search down other references from economists. It is amusing though that you flame Miscreant after his disclaimer. Maybe I have been trolled?

That is so true. It's just amazing that the contemporary definition of a "healthy" economy is when Corporate profits are increasing. In this case, much of those profits have come from consumer spending financed with borrowed money, instead of wages. This was never a sustainable situation. And we're going to find this out the hard way in the near future.

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unlawflcombatnt

[url=http://www.unlawflcombatnt.blogspot.com/]EconomicPopulistCommentary[/url]

[url=http://www.unlawflcombatnt.proboards84.com/]Economic Patriot Forum[/url]

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[i]The economy needs balance between the "means of production" & "means of consumption."[/i]

Yes the good economy is a republican plot.

/boggle

The numbers are good ...

people can ignore that if they want ...

I watch financial news channels and only partisans paint a different picture.

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[img]http://www.vosaclub.org/uploads/1013716823439885ec82c03.jpg [/img]

[B]Hardcore Conservative ![/B]

I said Conservative not necessarly Republican or Democrat. Liberals are in both of those parties.

[I]I'm a country Bumpkin Im not as articulate or educated as some here. But I dont have on blinders when I read.[/I]:) :001_tongu