With retail stocks surging on the back of the any-minute-now recovery (justified by the might of the Federal Reserve printing press), we thought it perhaps useful to consider just how great things are in the retail sales space. Given the non-stop accelerating rise in the equity prices, retail sales must be accelerating or must have turned up green-shoot-like? Well not so much. As the following chart shows, while retail sales (ex-food) is still rising modestly YoY, it is doing so a decelerating pace (as income growth stagnates and discretionary income slumps). But for now, all we must believe is the market knows best (until, 2008-like) it doesn’t.
Let’s make this simple. The government and media are basking in a report stating that retail stocks (and therefore retail sales) are surging. If the food component is removed, the actual trend shows a decline. Have you seen the price of food lately?
David DeGerolamo
