Retail Sales Fall in February Amplifying Recession Concerns

• Retail sales dropped 0.6% in February, led by declines at auto dealers and restaurants
• Goldman Sachs (not available online): Consumption growth in the first quarter will likely be very weak. So far, indicators related to consumption have been coming in below expectations—and expectations were generally low to begin with. Taken together, the data point toward either an outright drop in consumption or, at the very least, barely positive growth.
  
• January: Personal income increased by 0.3%; Bonus payments in January boosted
  wages and salary growth to 0.5%,; Personal spending rose by 0.4%; Real spending was unchanged; Disposable personal income rose 0.4% and after adjusting for inflation its rise was just 0.1%
• January: consumers again spent more than they earned driving the saving rate down to -0.1%.
• January U.S. Retail Sales (headline nominal): up 0.3%; up 0.3% excluding autos. Still very weak in real terms. Decreases in furniture, electronics, building materials and department stores.
  Strong gain in autos (+0.6% m/m) which is a surprise after the Commerce Dept. reported vehicles sales falling sharply in January (from 16.2 in Dec to 15.2 in Jan).
  Ex-Auto sales likely pushed up by gasoline that rose 2% in Jan – due to movement in prices.
  Core retail sales (ex autos, gasoline and food): essentially flat m/m in Jan
• Iley: the six-month annualised rate for these ‘core’ sales has dipped into negative territory at -0.3%. Some economic factoids aremore meaningful than others. Given that this did not happen in the 2001-2002 recession or indeed at anytime in the datasets 15-year history makesthis a startling development.
• The Reuters/University of Michigan preliminary index of consumer sentiment unexpectedly increased to 80.5, from December's 75.5 reading that was the lowest since 2005
• For all of 2007, retailers posted a 4.2% sales increase, the smallest in five years
• Ritholtz: Total sales gains from Thanksgiving to Christmas Eve were a nominal gain of 3.6% (and probably negative in real terms), according to data gathered by MasterCard’s SpendingPulse; Real sales showed an actual 0.0% gain -- or worse -- over 2006 levels