Core Retail Sales Just Beat Expectations While Annual Inflation Drops To Lowest Since 2009

Tyler Durden's picture

Following several months of disappointing retail sales, and two months of missed expectations, October finally saw the best beat in headline expectations since April, with retail sales rising 0.4% vs 0.1% expected. However, as has been the case in all of 2013, the bulk of this beat was driven by car sales, which rose by 1.3%, leaving sales ex autos beating by the tiniest of fractions at 0.2% vs 0.1% expected, and ex autos and gas +0.3%, vs 0.2% expected.

Looking at the components, following month after month of clothing store
sales misses, this category finally posted a modest 1.4%
rebound, together with an increase in Electronic and Sporting goods
sales, amounting to 1.4% and 1.6%, respecitvely. This was offset by the
traditionally strong Building materials sales which declined by 1.9% in


Unlike the exuberant inflation-spree that government-provided CPI showed during the Fed's QE2, since the start of QE3, inflation data (according to the never-manipulated government providers) has been on a downtrend. The latest print  - at expectations of 1.0% year-over-year - is the lowest CPI since October 2009. What is perhaps more notable is the drop into deflation on MoM basis (CPI -0.1% MoM vs +0.1% exp). Of course, the market's reaction is exuberance as this clearly gives the Fed a green light to provide more life-giving liquidity to enable nominal stock prices to rise. However, a glance at the chart below might just remind traders (and the Fed) of the Einsteinian foolishness that expectation.


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Sudden Debt's picture







I can't remember why....


LawsofPhysics's picture

Deflation?  You mean that the meager wages of my employees will actually purchase them more? Oh, the horror.



LawsofPhysics's picture

No, they debased (and are still devaluing) the currency with which the vast majority are being paid and conducting trade.  Hence, the rise of bitcoin (as a median of exchange, not a mechanism for saving) and other alternatives.

There is plenty of work to be done, plenty of jobs.  Work under the table, for silver, gold, bitcoins, whatever, just get the fuck away from dollars and any fiat.

GetZeeGold's picture



Walmart has to have food drives for it's employees.......cause none of them can afford to shop there.


If you're looking for inflation.......just visit a Walmart. It usually comes in the form of smaller packages.


If some worthless government mouthpiece is looking for inflation.....just send him to me.

madcows's picture

Just record your monthly purchases for everything.  That takes out the changes in package sizes, etc... 

BeerMe's picture

Too true.  The other day I was in the cereal aisle noticing the smaller boxes for the same price.

akak's picture

This whole 'shrinking package' bullshit that these manufacturers inflict on us just PISSES ME OFF!!

I recently noted that, after more than a CENTURY of having maintained the exact same size of bar of soap, the bastards at Proctologist and Gamble decided to shrink the size of their Ivory Soap by around 25-30%, without of course lowering the price.  These kind of games they play with packaging and/or quality of products is so fucking insulting, I REFUSE to buy any products so manipulated any longer!  I called the 'customer service' at P&G, and told them that after three generations of my family using Ivory Soap, we will be doing so no longer, due to their deceptive attempts to hide the ongoing rising price of their product.

AlaricBalth's picture

Fear not!!! Kehoe and Atkison of the Minneapolis Fed say Bernanke was incorrect as to his assessment about  depression and deflation.

Deflation and Depression:

Is There an Empirical Link?

"The data suggest that deflation is not closely related to depression. A broad historical look finds many more periods of deflation with reasonable growth than with depression and many more periods of depression with inflation than with deflation. Overall, the data show virtually no link between deflation and depression."

LawsofPhysics's picture

TPTB are simply moving the goal posts (again).

RobD's picture

Simple, back then the FIRE economy was a smaller part of the pie. Today if we were to have real deflation the FIRE economy would tank and take the overall economy into a deeper depression. Therefore the FED will never let it happen.

101 years and counting's picture

"You mean that the meager wages of my employees will actually purchase them more? Oh, the horror."

That is not acceptable!  TIME TO CUT THEIR WAGES!!!

RSloane's picture

How to personally gauge inflation: How much food is on your plate this year compared to how much food was on your plate last year, given the same amount spent?

Productive farmers or people that grow their own food need not reply. This means you and HH and a host of other people on this board, Laws.

AlaricBalth's picture

8/10/2012 From ZeroHedge: 

On Inflation, M2, and the Velocity of Money

"inflation actually follows M2 growth, even as the velocity of money (below) declines"

The Fed's primary inflation gauge is Personal Consumption Expenditures - Chained-type Price Index.

If you take the extra step and overlap this chart with your M2V chart you will see that the frequency at which one unit of currency is used to purchase domestically produced goods and services within a given time period has had an insubstantial effect on inflation.

I would venture to say that the decline in velocity, which peaked in 1997-98 has more to do with the repeal Glass-Steagal, the rise of mega-banks and the proliferation of derivatives.  Then as M2V began to rise again up to 2007, the crash ensued and much of the M2 increase went to repair bank balance sheets, which does nothing for velocity. 

BeanusCountus's picture

Nice chart.  No inflation?  I just finished our health insurance review.  Since 2000, our family premiums have increased at a 10.8% compound annual growth rate.  And if I was to charge the entire family premium to employees, an employee making $50,000 per year would now have to spend (are you ready for this?) 60% of his pre-tax income to insure the family.  Granted, we have the best coverage in the country.  Point here is that velocity of money is a nice statistic, but the cost of healthcare, education, utilities, water, food, etc., is taking up so much more disposable income that I fail to see how any of the "average" people in this country can afford anything if they are funding these necessities.

Headbanger's picture




TideFighter's picture

Retailer "SPACE AVAILABLE" is kicking ass and expanding everywhere. I see the "signs."

SheepDog-One's picture

Yep, 1 mall is so desperate here I saw a 'move in now, don't pay for a year' sign.

VD's picture

if you believe CPI and BLS 'data', then QE4EVA will end shortly.

LawsofPhysics's picture

History rythming?  What's has happened to the real unemployment number?  What has happened to the average wage?  What has happened to food stamp usage, medicare usage, etc. etc.?

Hedge accordingly.

jtz5's picture

Can someone please explain why the Fed thinks deflation is so bad?

LawsofPhysics's picture

The banks become insolvent even quicker.  Mark to fantasy forever!  The Fed is a private bank.  The hold no real assets in their "vaults".  You no it's bad when you can't even get the fantasy numbers to stick.

Bioscale's picture

How do the bank become insolvent through deflation? Would someone please care to explain this in more details?

I often read arguments against deflation referering to the Great Depresion, but it does not make much sense. I'm bit suspicious that there is something not mentioned and hidden there.

LawsofPhysics's picture

The assets on their balance sheet (which their loans are made against) become worth less.  Less capital means they cannot service their own debts or pay their own bills.

It's even worse because the banking and investment (casino) sides of the house are now co-mingled (Is John corzine in prison yet?).  They are gambling with everyone's 401ks etc.

There once was a time when capital was respected (required for capitalism to function), and when banks (or any business) was mis-managed, they went bankrupt.  The management and owners lost their wealth and were reasponsible for paying back the creditors themselves.  Now, these kleptocrats force the tapayer to bail them out (socialization of private losses).

Real consequences for bad behavior, at all levels.  This is the solution.  We can do this rationally of the laws of Nature and physics will impose it on us.  Tick tock motherfuckers.

Bioscale's picture

Thanks, why has then the "deflationary spiral" such negative consequenses? Deflation is just different future market expectations, instead of rising prices we have falling prices, the "logic" of the economy, the market machine works the same either way, right?

LawsofPhysics's picture

Yes, but debt still needs to be serviced (or defaulted upon).  Banks create nothing of real value except debt.  If future expectations are bad, then that debt cannot be serviced (very bad for a paper-pusher who has nothing else to offer society).

Roll the motherfucking guillotines.

Headbanger's picture

Cause the value of assets drops but the debt on the other side of the balance sheet doesn't so it causes the Earth's poles to flip and people freak when they see the moon is upside down!

Any other questions?

LawsofPhysics's picture

Kind of makes you wonder why banks don't simply erase that debt.  they can't of course because that debt is their interest income (money for doing nothing). 

dick cheneys ghost's picture

I saw that last nite, of course I was drinking craft beer again

101 years and counting's picture

dont forget the reversal of the poles attracts asteroids, which will slam into the earth.  causing the earth's crust to become displaced, resulting in global tsunamis wiping out 90% of current land masses.  oh the horror.  the horror.

ejmoosa's picture

The Fed fears deflation because they fear people will stop producing if they get less and less for their production.  

LawsofPhysics's picture

Bullshit.  No society/currency has ever collapsed/died because their purchasing power was too strong.  The problem is the fact that we have financialized the economy and offer the world nothing of real value (we are useless consumers, not producers).  Unless of course you consider financial "products" of mass destruction to have real value.  Good luck with that...

OneTinSoldier66's picture

Define: deflation


Is it that thing where I get to actually keep the purchasing power of the fruits of my labor?


I believe that I should be able to actually keep the value of my labor as opposed to having robbed from an "artificial" inflation of the money supply. After the artificial printing press has been stopped and the Central Bank begins to "unwind" it purchases, then we can talk about deflation. Until then, there is no deflation.


If the dollar implodes are you going to blame it on the "free market"? I can assure you, we don't have free markets.

limit_less's picture

"even though we have less purchasing power than years or decades before" are you talking about deflation or inflation?

Cursive's picture

My truthiness headline:  Retail sales beat on back of heavy retailer discounting and promotions


Disclosure:  I recently bought a pair of running shoes for $20.  Brand name.

TapeReader's picture

Using our Social Tape Nowcasting algorithms, we tweeted the upside surprise 30 minutes before the Retail Sales Announcement.

We provide early announcment capabilities for consumer baased economic announcments at Early Announcement.



max2205's picture

The only way out for the fed is to double the price of everyone's house.....good luck with that


IWM on a .5% tear PM

uncle.bigs's picture

The government's retail sales report is BS just like all of their other numbers.  Retailers have already reported actual results.  Home Depot comps up 8%.  Tractor Supply comps up 7%.  Lazy Boy comps up 13.7%.  These are middle America retailers.  Sorry folks but the economy is booming.

LawsofPhysics's picture

Real wages?  SNAP usage?  Real unemployment?  Medicare/medicaid costs? 

Has congress passed a budget yet?

How will we service the debt when interest rates keep going up.

Must be our lying eyes.

Tick tock motherfucker...

uncle.bigs's picture

National income and spending is at an all-time high.  Corporate profits at an all-time high.  Deficit is coming down.  Facts are facts people.  Maybe it's not sustainable or maybe it is for the next 20 years.  What is going to stop nominal GDP and profits from expanding?  Government is going to cut back spending?  No chance.  Fat lazy Americans are going to start saving more money?  LOL.  The only thing that will stop the economy is much higher 10 year treasury rates.  At 4%+, the economy will stall.

LawsofPhysics's picture

"The only thing that will stop the economy is much higher 10 year treasury rates.  At 4%+, the economy will stall."-

Exactly.   National income per capita is not at an all time high.  Now you are simply lying. Thanks for helping make my point regarding the cost of capital. Liabilities still need to be funded, tick tock motherfuckers.

You also  conveiniently igonore credit.  FAIL. 

SheepDog-One's picture

Why does anyone believe these numbers which are just stock-driving propaganda? Right on time, there goes futures rocketing upwards.

Traianus Augustus's picture

What a bunch of BLS!!!

whateverittakes's picture

There is limited room for corporations to raise prices in a global internet linked economy. Somebody somewhere can market a lower priced alternative. That is why top line is stagnant. Does not bode well for corporate earnings going forward as costs will rise first.

GrinandBearit's picture

Notice how their lies are becoming more obvious and more blatant.

Even the algos aren't believing it anymore.


MFLTucson's picture

More news from the clowns!  Inflation is ridiculously high when you factor in food and energy but, the brains we have in the charade they call DC decided that Food and energy are not relevant to sustain life.  What a disgusting group of shit we are dealing with!  I cannot believe we have reached the point we are at with this trash in the White House and the constant fraud and deception out of this government.


We are the only country is history that has defied the laws of economics.  Printing a trillion in fake money every year does not because the dollar to be worth less, we just keep trucking along lying to ourselves till implosion time comes and no one wants this junk!

OneTinSoldier66's picture

"...Annual Inflation Drops to Lowest since 2009"


So, you mean Central Banks are printing up lesser quantities of money out of thin air lately? The least since 2009?


I'm still waiting for the day when Central Banks begin to sell some of what they have acquired. Or do they plan to acquire everything by printing up money out of thin air forever!?!?