Courtesy of Mish.
By the time economists see the next recession it may be half-over. Heck, it might even be over (it’s happened before).
Through thick and thin economists remain optimistic. Today, despite an easily predictable decline in retail sales, economists did not see the decline coming. Instead, Huge Miss in Retail Sales Seen as a Blip.
U.S. retail sales recorded their largest decline in 11 months in December as demand fell almost across the board, tempering expectations for a sharp acceleration in consumer spending in the fourth quarter.
Economists, however, cautioned against reading too much into the surprise weakness, noting that holiday spending made it difficult to smooth December data for seasonal fluctuations.
“Faulty seasonal adjustments from shifts in holiday spending patterns are probably more to blame for the December decline,” said Steve Blitz, chief economist at ITG in New York. “Looking at the last three months, spending is not collapsing.”
Bricklin Dwyer, a senior economist at BNP Paribas in New York, said fewer post-Black Friday shopping days in November than normal threw off the so-called seasonal factor used to adjust the data, resulting in a lower December sales number.
“For January 2015, this seasonal factor will boost sales by the largest factor since 2006,” said Dwyer.
“This combined with the fact that we have seen a massive boost to consumer’s wallets as a result of the rapid decline in gasoline prices, suggests that January could be a big month that reverses much of the December drop,” he said.
In December, a so-called core sales gauge that strips out automobiles, gasoline, building materials and food services, fell 0.4 percent after a 0.6 percent rise in November.
Economists had expected this metric, which corresponds most closely with the consumer spending component of gross domestic product, to rise 0.4 percent last month.
Unbridled Optimism
A decline in core spending (0.4% to the downside vs expectations of 0.4% to the upside) did not dampen economist optimism. (For details, please see Retail Sales Post Huge Downward Surprise; Lower GDP Revisions Coming Up; Economists Easy to Surprise)
While there easily could be a seasonal boost in January, what about autos? And what about declining wages? …
