Monday, October 04, 2004

August was a loser as far as consumption went. Personal consumption expenditures were unchanged from July and retail sales are generally acknowledged to have been poor (the official data on August retail sales won't be out until next Friday).

Thus news that September was also a real loser can't sit terribly well among the "soft patch" believers.
The retail sector is in for some bad news later this week when soft September sales numbers hit the market . . .

"I do think everybody knows that numbers are going to be soft for September, but there's optimism going forward," said David Griffith, analyst for Tradition Asiel Securities.

Griffith and other analysts say the worst may be over for a number of retailers, and the market could be looking for the sector to bounce back. October and November provide hope since comparisons with 2003 are likely to be favorable for many companies, he said.

Ultimately, that means investors already have written off September, as well as the hurricanes that troubled many retailers in the Southeast during the month.
Well, hope always does spring eternal. That being said, third quarter growth is going to look mighty ugly. All the consumer expenditure growth for the quarter looks like it will have been packed into July alone, and that only because of a tremendous fall in sales in June. The actual GDP number might not be as weak as it should because [1] July consumption was such a big leap over June; and [2] capital investment seems to be sailing along despite flagging consumption.

Consumption growth was a mere 1.6% in the second quarter. It looks like we're being set up for a third quarter figure even weaker.

The last time the US had back-to-back quarters of consumption growth below 2%? The 2001 recession. And before that? The 1990-91 recession. While the marquee numbers don't look terribly bad, the foundations of this "recovery" seem to be rotting before our eyes.

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