Total retail sales for March clocked in at $344.4 billion, a decrease of 1.1% from February and a 9.4% dive from March 2008. Overall, first quarter retail sales sank 8.8% compared to the same period a year ago, the U.S. Commerce Department said in a report.

The stats reverse the back-to-back monthly gains that kicked off 2009. Those gains surprised the market not only because they followed dismal holiday shopping numbers in November and December, but also because unemployment continued to get worse.

“The surprisingly sharp drop in retail spending shows how uncertain consumers are about the recovery,” Joel Naroff, president of Naroff Economic Advisers, wrote in a note to clients. “Consumer spending had been growing much more strongly in the first quarter than any of us could have expected, so a one-month cutback should not have been a surprise.”

Among the hardest hit sectors, gasoline station sales were down 34.1% from March 2008, and motor vehicle and parts dealers’ sales were down 23.5% from last year. Food and beverage stores held strong with only a 0.1% decline. Healthcare spending posted the best figures with a 2.2% annual gain.

“This was not a pretty report as demand for just about everything fell,” Naroff said. “There were large reductions in demand for furniture, electronics and appliances, building materials, sporting goods and clothing.”

Sinking demand for energy products played a large hand in keeping producer prices in check. The U.S. Department of Labor said that the Producer Price Index (PPI) for finished goods, a measure of inflation, fell 1.2% in March after inching forward 0.1% in February.

Prices for energy products fell 5.5% after rising 1.3% in February. Food prices fell 0.7% after falling 1.6% the month prior. Excluding food and energy, the PPI was a flat for the month.

While not a positive, flat inflation isn’t much of a threat when compared to the host of other economic issues the Obama Administration is addressing. In fact, the U.S. Federal Reserve said it expected inflation to be “subdued” in a March 18 statement.

But inflationary concerns will be on the horizon, when government measures to reboot the economy kick in – flooding the market with liquidity that can’t be absorbed by record low interest rates.

Source: Retail Sales and Inflation Slip in March

Total retail sales for March clocked in at $344.4 billion, a decrease of 1.1% from February and a 9.4% dive from March 2008. Overall, first quarter retail sales sank 8.8% compared to the same period a year ago, the U.S. Commerce Department said in a report.

The stats reverse the back-to-back monthly gains that kicked off 2009. Those gains surprised the market not only because they followed dismal holiday shopping numbers in November and December, but also because unemployment continued to get worse.

“The surprisingly sharp drop in retail spending shows how uncertain consumers are about the recovery,” Joel Naroff, president of Naroff Economic Advisers, wrote in a note to clients. “Consumer spending had been growing much more strongly in the first quarter than any of us could have expected, so a one-month cutback should not have been a surprise.”

Among the hardest hit sectors, gasoline station sales were down 34.1% from March 2008, and motor vehicle and parts dealers’ sales were down 23.5% from last year. Food and beverage stores held strong with only a 0.1% decline. Healthcare spending posted the best figures with a 2.2% annual gain.

“This was not a pretty report as demand for just about everything fell,” Naroff said. “There were large reductions in demand for furniture, electronics and appliances, building materials, sporting goods and clothing.”

Sinking demand for energy products played a large hand in keeping producer prices in check. The U.S. Department of Labor said that the Producer Price Index (PPI) for finished goods, a measure of inflation, fell 1.2% in March after inching forward 0.1% in February.

Prices for energy products fell 5.5% after rising 1.3% in February. Food prices fell 0.7% after falling 1.6% the month prior. Excluding food and energy, the PPI was a flat for the month.

While not a positive, flat inflation isn’t much of a threat when compared to the host of other economic issues the Obama Administration is addressing. In fact, the U.S. Federal Reserve said it expected inflation to be “subdued” in a March 18 statement.

But inflationary concerns will be on the horizon, when government measures to reboot the economy kick in – flooding the market with liquidity that can’t be absorbed by record low interest rates.

Source: Retail Sales and Inflation Slip in March

Retail sales have now declined for six straight months – the longest streak on record – as falling home values, tight credit conditions and soaring unemployment have sent consumers into a full scale retreat that is showing no signs of letting up.
The U.S. unemployment rate rose to 7.2% in December, as the economy lost 2.6 million jobs last year, the most since World War II ended in 1945. The Conference Board’s consumer confidence index declined to a new all-time low of 38.0 in December, down from 44.7 in November.

“The economy is staring at a very steep, downward trajectory,” Jim Demasi, chief fixed-income strategist at Stifel Nicolaus & Co., told Reuters. “This shows a very sharp falling in household wealth and job creation. This shows a shock in consumer confidence.”

Sales at clothing stores fell 2.5% in December and sales of sporting goods slid 0.4%. The declines in both apparel categories, as well as a 2.2% drop in same-store sales over the final two months of the year, confirmed reports that the 2008 holiday shopping season was the worst in since World War II.

Overall retail sales were also dragged lower by a 15.9% drop in gasoline prices, which have fallen off a cliff since hitting a record high $4.114 a gallon in July of last year. The national average for regular gasoline is now stands $1.792 a gallon according to auto-service AAA. The decline in gas prices in indicative of a similar drop in the price of crude oil, which is down 75% from its record high of $147 a barrel, also reached last July.

The decline in commodity prices across the board that has resulted slumping global demand is also driving down the prices of U.S. imports.

The Labor Department’s import-price index fell 4.2% in December after a revised 7.0% decline in November. The index posted a year-over-year decline of 9.3% – the largest such decline since the index’s 1982 inception.

Retail Sales Extend Record Streak of Monthly Declines

Judging by reports, this will be the worst holiday shopping season in almost 40 years. This means that after the next round of corporate earnings reports that start next week, a wave of bankruptcy filings could follow. On a recent Bloomberg radio interview, Burt Flickinger of Strategic Resource Group said “You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out.”

So what does this mean to you? A few things: for one, it means now it is time to buy big, national chains that aren’t in any danger of closing. Companies such as Wal-Mart (WMT), Target, and Best Buy will gain market share as smaller competitors go out of business. This will also mean increased revenue from the growing customer base.

Secondly, if you have gift cards or after-holiday returns to some stores that are already in bankruptcy (Circuit City, Linen’s and Things) or on the verge of closing, hurry up and use the gift cards or return the merchandise.

It also means that if you are willing to roll the dice a bit, you may be able to get incredible deals as retailers blowout their inventories before closing. Electronics could be especially appealing, although getting warranty claims could be near impossible without a storefront to take the product back. Like everything in life, it’s risk versus reward.

Finally, it reinforces that commercial REITs should be avoided. Commercial REITs have been getting hammered lately, and soon face rising vacancies as more and more storefronts are shuttered.

Source: A Big Shakeout In Retail Is Coming In 2009

Tuesday morning starts off with the final GDP report for the third quarter, and it looks like there won’t be any changes to the figure since the last report. As it stands, the report will likely show a contraction of a half-percent for the quarter. In my opinion, with everything that has transpired in the market, that isn’t so bad. If you think about all the job losses, failed businesses, etc. it seems like it could have been much worse.

The other big reports on Tuesday are the Existing Home Sales and New Home Sales reports for November. The Existing Home Sales report is expected to show a drop of 50k units, and the New Home Sales is likely to report a drop of 13k units. Without being able to see the breakdown per region, it is tough to say if this shows the further decline of the housing market, or if it is simply a seasonal slowdown in the Midwest and Northeast. I would tend to believe it is the latter.

Wednesday sees all three reports announced simultaneously at 8:30 am. The Durable Goods report for November is likely to show another dip of over three percent. Without sounding like a broken record, this shouldn’t surprise anyone. No one has money to purchase big-ticket items, Christmas discounts or not.

The other two announcements on Wednesday are the Personal Income and Personal Spending reports for November. Personal Income is expected to hold steady from last month, while the Spending report is likely to show another decline. Since the holiday shopping season really kicked off at the very tail end of last month, it probably didn’t boost the Spending report last month, but I definitely expect it to boost the December report.

Have a safe holiday break.

Source: GDP and Home Sales Highlight A Short, But Very Busy Week

This from Investor’s Daily Edge:

Now that the election is over instead of focusing on what is going to happen over the next 10 weeks until the inauguration, I thought it would serve our readers better to look further out.  Over the next 10 weeks there are going to be numerous news items that will affect the market.  Traders will analyze each cabinet nomination, especially the selection of Treasury Secretary.  There are two more employment reports due out before the inauguration, the holiday shopping season, and the next earnings cycle will start before January 20.

Right now, everyone wants to know how President Obama is going to turn the economy around.  First, it isn’t going to happen overnight.  We aren’t going to go to bed on January 20 and wake up on January 21 and magically the economy is fixed.  And this would have been the same had McCain won.

One thing that might change somewhat overnight is we could see a boost in consumer confidence.  With things looking so dire, a change in leadership certainly couldn’t hurt right now.  Kind of like when a sports team makes a coaching change in the middle of the season.  All of the sudden the team goes on a winning streak with the same players.  When leadership is changed, there is an attitude change.  We better hope this is the case for the American economy.

In order for the economy to turn the corner and start improving, one of the big three has to start improving.  I am not talking about General Motos (NYSE:GM), Ford (NYSE:F) and Chrysler.  I am talking about the other big three.

What are the other big three?

As children, most of us dreamed of having three things when we thought about growing up: a nice house, a nice car, and a nice job.  These are the other big three.  Right now, these big three for most people are about as optimistic as the outlook for the automotive big three.

Over the past year, home values have dropped sharply, auto sales have dropped like a rock, and unemployment has gone through the roof.  Before the U.S. economy can turn around, at least one of these markets is going to have to turn higher.

After the October payroll numbers were released, it isn’t looking likely the job market is going to be the one that turns around anytime soon.  Adding the 240,000 jobs lost in October to the rest of the year, the number of jobs lost so far this year has reached 1.2 million.

Turning our attention to auto sales, the picture is much the same.  October’s numbers are the worst since 1992.  You might recall this was during the ‘91-’92 recession.  Vehicle sales have been falling for over three years now after peaking in the third quarter of 2005.

Much has been written in IDE as well as other publications about the trouble of The Big Three.  Without a doubt the U.S. automakers have serious problems, but as you can see in the chart, import sales are declining as well.

The third of the other big three, housing, may have the best shot at turning around first.

Source: The Economy Won’t Turn The Corner Until The Other Big Three Turn The Corner