Recession Looming? - Tilted Forum Project Discussion Community

unlawflcombatnt · 08-18-2006, 07:56 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

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. Economist Nouriel Roubini, former member of Clinton's Council of Economic Advisors, has put the likelihood of Recession at 70% by the end of 2006. Another article from the Daily Reckoning 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

Infinite_Loser · 08-18-2006, 08:07 PM

I never understood why people make a big fuss out of recessions. They're inevitable and will always occur after a period of inflation. It's like the ebb and flow of a tide-- It happens.

By the way, I could have told you last year that the housing bubble would end up bursting by the end of this year.

Elphaba · 08-18-2006, 08:19 PM

I have been seeing the uncertainly in the middle and upper middle class for some years in their uncertainty regarding the economy and the wild fluctuations with the stock market. Add to that the growing problems in the Middle East and uncertainty now has a major influence among the producers of wealth in our country.

If a third recession is coming during the life of my small business, it will be the end of my business. I can no longer kid myself; it is done anyway as of 12/31/2006, and all that remains is the mopping up for bankruptcy.

I do not believe in economic miracles that would counter what has brought us to were we are now.

Gee, I'm such a downer. Look around folks...a lot of hard working folks with a dream are going down in this economy.

Quote:

Originally Posted by Infinite_Loser

I never understood why people make a big fuss out of recessions. They're inevitable and will always occur after a period of inflation. It's like the ebb and flow of a tide-- It happens.

By the way, I could have told you last year that the housing bubble would end up bursting by the end of this year.

We didn't have a period of inflation. Unless you are smarter than the Fed, the "bubble" is only being experienced at local rather than national levels.

You claim an economic knowledge and certainty that exceeds Greenspan's. I would be very interested in seeing your credentials.

08-18-2006, 07:56 PM	#1 (permalink)
unlawflcombatnt Upright Location: California	Recession Looming? 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 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. Economist Nouriel Roubini, former member of Clinton's Council of Economic Advisors, has put the likelihood of Recession at 70% by the end of 2006. Another article from the Daily Reckoning 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

08-18-2006, 08:07 PM	#2 (permalink)
Infinite_Loser Junkie Location: Lake Mary, FL	I never understood why people make a big fuss out of recessions. They're inevitable and will always occur after a period of inflation. It's like the ebb and flow of a tide-- It happens. By the way, I could have told you last year that the housing bubble would end up bursting by the end of this year. __________________ I believe in equality; Everyone is equally inferior to me.