Reported Economic News vs. Reality

Today retail sales for February were released. The number came in at a quite surprisingly robust 1.1% gain (annualized basis) over January. Aside from the fact that the number has been put through the customary "seasonally adjusted" meat grinder, it's just not a credible number. It is likely that the number includes a high inflation factor. Given that a big part of the gain was a 5% jump in gasoline sales, and given that February's average gasoline price per gallon nationwide was at an all-time high for February, that would explain most of the "gain."

But, in fact, if you strip on the "seasonal adjustment" - the unadjusted actual number is buried in the report - it turns out that sales declined from Jan to Feb, the first month to month decline in 3 years. This makes more sense, as consumers are being squeezed by higher payroll taxes, higher gasoline costs, higher food costs (a whole roaster chicken the other day cost me $1/lb vs. .80/lb six months ago). And the fact that consumer's disposable income is getting squeezed shows up in the Feb numbers for furniture sales (-1.6%), electronics (-0.2%) and sporting goods (-0.9%).

Here's what John Williams had to say about the matter:

Reporting here of positive real monthly growth runs counter to various indications out of the business sector, including retailers, retail suppliers and those delivering product, and to indications of a build-up in unwanted inventories. It also runs counter to the implications of constraints on consumption from the intense, structural-liquidity woes besetting the consumer. Without real growth in income, and without the ability or willingness to take on meaningful new debt, the consumer cannot sustain real growth in retail sales or in the broader personal-consumption measure of GDP. As usual, monthly reporting also is skewed meaningfully by seasonal-adjustment issues.

Well, other than that, Mrs. Lincoln, did you enjoy the play?

Finally, just to beat this dead horse into the ground, www.zerohedge.com posted a nice summary of the economic outlook released by the Business Roundtable, a consortium of leading corporate CEO's:

Expectations for higher Sales, CapEx, and Employment are as bad as they have been since early 2010. CapEx, the much-vaunted miracle driver of revenues this year, is below Q4 2009 levels of expectation...

As you can see, the "seasonally adjusted" number released by the Census Bureau is completely inconsistent with real world data points. The same holds true for recently released home sales, construction spending and employment numbers. More on housing soon, as I'm working on an in-depth piece that explains why the housing market is rolling over again.

The Orwellian fog being blown over our system is getting worse. We learned just the other day that the Dept of Defense has removed all data from its website related to drone strikes in Afghanistan: Wonder what else the Government is hiding from us?

There's no question the Government is working overtime to try and juice up our "confidence" in the economy by manufacturing bullish economic numbers and printing more and more money and funneling a significant amount of it into the stock market via the banks. Makes you wonder just how bad things really are, given that the Fed is buying 50% of all new debt being issued by the Treasury...