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unlawflcombatnt
08-27-2006, 09:35 PM
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 (http://www.census.gov/svsd/www/marts_current.pdf)

http://i27.photobucket.com/albums/c190/unlawflcombatnt/8-11-06grphRetlSlsBEA-X.gif

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 (http://mparent7777.livejournal.com/11046250.html). Economist Nouriel Roubini, former member of Clinton's Council of Economic Advisors, has put the likelihood of Recession (http://www.rgemonitor.com/blog/roubini/139867) at 70% by the end of 2006. Another article from the Daily Reckoning (http://www.dailyreckoning.co.uk/article/09082006.html) 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 (http://www.unlawflcombatnt.blogspot.com/)

Economic Patriot Forum (http://www.unlawflcombatnt.proboards84.com/)

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

Sin Studly
08-29-2006, 09:05 AM
Recessions are great because they make people holocaust races seen as disproportionately wealthy, like Jews and the Japanese.

unlawflcombatnt
08-29-2006, 10:56 PM
One of the recession indicators cited by both economist Nouriel Roubini and the Daily Reckoning was a decline in consumer purchase of durable goods. According to the U.S. Bureau of Economic Analysis, the annualized rate of consumer purchase of Durable Goods declined $1.4 billion in the second quarter, or about 0.5%. Below is a copy of a page from the BEA with the recent changes underlined in re.

http://i27.photobucket.com/albums/c190/unlawflcombatnt/8-13-06PersConsExpBEAr.gif

This can also be found on Table 8 from the latest BEA report (http://www.bea.gov/bea/newsrelarchive/2006/pi0606.pdf). This decline is one of the indicators cited by both economist Nouriel Roubini and at the Daily Reckoning site.

August 16th's report of Industrial Production contained further evidence of a downturn in Durable Goods. The latest indicators come from the charts at the Federal Reserve site.

Notice that there was a marked decline in Durable Goods production during the recession of 2001, which had resolved by late 2002. This decline was much greater than any changes in non-durable goods production, which flattened over the same time period. This can be seen from the modified graph below taken from the Federal Reserve site. (http://www.federalreserve.gov/releases/G17/Current/g17.pdf)

http://i27.photobucket.com/albums/c190/unlawflcombatnt/8-16-06grphDurGdsProd-X.gif

The above graph shows Durable Goods production. However, this tends to parallel Durable Goods purchases by consumers. As noted above, Durable Goods purchases by consumers have declined -$1.4 billion in the 2nd quarter, or -0.5%.

The Industrial Production report from the Federal Reserve showed a decline in Consumer Goods production in July of -0.3% over June. Since July, Consumer Goods production has increased only 1.7%. This can be seen from the modified chart from the Federal Reserve (http://www.federalreserve.gov/releases/G17/Current/g17.pdf) below.

http://i27.photobucket.com/albums/c190/unlawflcombatnt/8-16-06grphIndProdFedRsrvX.gif

It's also worth noting from the above graph that year 2002 is the baseline for the index numbers. Thus, an increase in the index to 107.1 implies that American consumer goods production has increased a total of only 7.1% since mid 2002. Which means over 4 years, consumer production has increased only 7.1%, or about 1.8%/year.

If history holds true, a sustained decline in Durable Orders purchases by consumers will precede a recession. Since they are declining at present, a recession looks very likely.

unlawflcombatnt

EconomicPopulistCommentary (http://www.unlawflcombatnt.blogspot.com/)

Economic Patriot Forum (http://www.unlawflcombatnt.proboards84.com/)

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

H1T_That
08-30-2006, 10:57 AM
Who is this guy?

Whiplash
08-30-2006, 02:11 PM
Some kind of economy nerd, Its ok to talk about recession but atleast give something we can discuse. Don't just give loads of info.

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08-30-2006, 03:13 PM
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08-30-2006, 04:34 PM
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08-30-2006, 05:12 PM
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