Retail Sales Bloodbath: Control Group Has First Decline Since "Polar Vortex"

Tyler Durden's picture

It may come as a shocker to some, but hopefully not to anyone here, that September retail sales were arguably the worst of the year excluding the "abortion" that was the Polar Vortex. The simple reason: after the US consumer loaded up on debt in the spring and the summer, the payback hangover has finally hit with the payment due in the mail resulting in a collapse in revolving credit as reported previously, and as the September retail sales just confirmed:

  • Headline retail sales: -0.3% missing expectations of a -0.1% decline, and down from the 0.6% in August
  • Retail sales ex-Autos -0.2%, missing expectations of a +0.2% increase, and down from +0.3%.
  • Retail sales ex-Autos and gas: -0.1%, missing expectations of a solid 0.4% rebound and down from 0.5%

And not just that: clothing stores dropped -1.2%, sporting goods dropped -0.1%, furniture was down -0.8%, miscellaneous retailers -0.2%, and, sorry Jeff Bezos, online "non-store retailers" such as Amazon declined -1.1%.

Because nothing screams recovery like the US consumer slamming the spending breaks just as the holiday season begins to unwind.

Finally, the all important Retail Sales Control posted its first sequential decline since unprecedented "snow in the winter" January.

And there goes the latest recovery dead cat bounce.

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gdogus erectus's picture

I'm doing my part. I bought a cabin on wheels for the mountains. And more lead.

Manthong's picture

It's got to be global warming this time.

Headbanger's picture

But but but... iPad 6!!

iPad6!!

I FUCKING PAD SIX!!!!

WHAAAHHHHHHHH!!!!

codecode's picture

Hope it doesn't snow this winter...

LULZBank's picture

Nor it gets cold, or rains or the sun shines too bright...

BlindMonkey's picture

Don't forget the fucking watch.  That will save us all.

Raoul_Luke's picture

I fully expect a Fed announcement here that they are fully prepared to implement QE4 if the data continues to show weakness.  They had to have had a plan b, right?  The pressure coming from the White House must be intense - can't have a collapse into the November election.

observer007's picture

Dog has EBOLA?

The dog belonging to the Dallas nurse infected with Ebola has been moved to quarantine in a decommissioned naval base. Nina Pham was happy to hear Bentley was doing just fine. Jane Pauley reports.

 

Turkish Airlines aircraft flying from Istanbul to Pisa made an emergency landing because of the risk of Ebola virus, the Turkish newspaper Sabah reports Oct. 15.

taketheredpill's picture

 

 

 

Bentley will be in my prayers tonight.

101 years and counting's picture

memo to Tyler, maybe the complete lack of demand for oil is causing oil to crumble?  wipe out some leverage, and amazing how quickly funds (that keep oil artificially inflated like stocks) need to liquidate positions.

SlipStitchPass's picture

OK....enough for one day......We still have fucking work to do today.

Handful of Dust's picture

Empty stores may have something to do with a drop in sales and revenues. I'm no economist, but there may be a link there.

gatorengineer's picture

Going to the store is so 1990s..... I can click on the internet, have Amascam deliver it to my door, and they only loose a little on each transaction.

RaceToTheBottom's picture

Does Ebola count as Airborn if it is on the outside of the Amazon box being shipped?

Midnight Rider's picture

But... online "non-store retailers" such as Amazon declined -1.1%

Coletrane's picture

credit's maxed out..............Christmas numbers should be interesting.

lol

gatorengineer's picture

I think the baltic dry being half of what it was a year ago is a loud canary for a sales disaster

Last of the Middle Class's picture

Long duct tape, vinyl sheets, chem suits, respirators, bottled water, canned food, and of course high velocity Pb.

That's all Folks's picture

Full bio suit... the hotest Halloween costume this year!! Don't forget your poster board/sharpie EBOLA signs.

-That's all Folks-

madcows's picture

Huh!  Back to school sales were negative?  Was it the Solar Vortex?

AdvancingTime's picture

Almost two years ago during a television interview on Bloomberg, Harvard economist Steven Roach put a retail sales consultant in her place who was crowing about strong retail growth. Roach pointed out that after discounting for inflation growth in retail sales compared to past years is mostly an illusion.

I wish Roach had gone to the next step and pointed out that what little growth does exist is built on a foundation of demand from huge government deficit spending. The article below looks into how this weakness continue until the economy begins producing a slew of better paying jobs.

 http://brucewilds.blogspot.com/2014/09/consumers-are-facing-protracted-weakness.html

 

dalitis's picture

I like it how professional "financial reporters" usually fail to include ino their calculations and articles about growth in retail sales the rate of inflation. It's like referring to your basketball team's points haul and completely leaving out the points scored by the opposing team. 

Temerity Trader's picture

Stores have been mostly empty for years. Chinese-made crap on sale everywhere. Fifty to eighty percent off crap made for pennies in Vietnam.

How much s*** can any human being purchase and own? How many f***ing SUVs will fit in the driveway and garage?  How many more I-Phones can a person use? When everybody’s credit cards are maxed out and every person owns a 20 ft UHDTV, does it end? Another boat or jet skis to just sit there on the side of the house? A new motor home bought with loose Fed credit? The McMansion tumbling in value and in foreclosure. Can’t go buy another bag of potato chips with the EBT card because the repo man picked up the F-350 mega-truck in the middle of the night.

One morning we will open limit down and end the day -1000. The lemmings will rightfully panic and the Fed will announce more QE, it won’t stop the selling. We will go right back to where the markets started before five TRILLION $ was pumped in by the Fed. This time it won’t come back.

LULZBank's picture

Can't you buy just one more?

GreatUncle's picture

Agree with what you say but think it would be better expressed as when the consumer reaches the maximum debt level they can service you really cannot afford to buy more.

Consumerism was a one trick pony and once you have the debt there is no way to remove it except by cutting or deflating the debt away.

ejmoosa's picture

The maximum they could theoretically service and the maximum they are willing to have are two different amounts.  TPTP have been ignoring the latter and dreaming of the first in their models.

We have moves so much consumption from the future to the present that there is a big empty void of demand going forward.

That is why you see members of both parties working to open the borders.  They need more consumers here-STAT.

arby63's picture

And there you have it. That is exactly where we are headed right now. Turn up the printing presses all you want but it won't make a hill of beans because Americans are TAPPED OUT.

Real sales--for real products--have been in slow decline for more than a year. The QE morphine cannot effect what's going on in real America.

Obamacare probably put the final nail in the coffin. Good luck to the IRS sorting this fucker out. Look for IRS agents to be accosted in a routine basis moving forward. Maybe that's why they bought those Remingtons? 

Still have direct deposit?

RKDS's picture

Stores have been mostly empty for years.

I've noticed that too.  Only being in my 30s, the most vivid contrast to me is a Toys R Us 25-30 years ago versus a Toys R Us now.  Used to be awarehouses packed with toys.  Now it looks like if _I_ tried to run a store with my five figure credit line and only large properties available for rent.

Similar story everywhere else.  I've been working extra part-time hours at a grocery store for longer than I care to admit.  Food just isn't coming in from the warehouse like it used to.  This was gradual, over some time, but it's only suddenly become apparent how bare some of our shelves are.  I have no idea what sales are like these days because I'm in during what used to be shopping lulls.  But I know we have less people working in the store and my paychecks buy less food than they used to.

But, because I've tried to start my own retail business, it's hard for me to place the blame solely on the Fed.  Rent is fucking insane.  There are a couple smallish strip malls near the grocery store and some of the smaller businesses, like the video rental place, went under.  I inquired what the rent was and was told $6000 per month with no utilities or insurance.  That's almost 7 times my mortgage or the average apartment rent out here.  And on the _low_ end of commerical rent.  That tone-deaf idiocy is what shuts businesses down.  Not 6% sales tax collected on top of a sale or the five minutes it takes to file every 6 months.

To pay $6000 rent, on, let's be generous, a 20% profit margin, I need to buy $30000 of inventory with a completely unrealistic 100% sell through.  At $15, the average price of a regular action figure these days, you're talking 2000 figures.  That's assuming that everything that came in on July 1st is out the door by July 31st.  And repeats every single month.   Man, nobody gets that lucky, except maybe something like an Apple store, that has 2-3 products in chronic short supply.  So let's say you sell through half of what you buy.  That means you need to put out $60000 to have enough inventory to sell enough to make the rent.  And because that's disappearing into rent/products, it's $60000 that continues to have to "float" in the business.

Now consider that you need electricity (lights, not freezing in winter or cooking in summer, etc), basic CC processing, some kind of burglary insurance so you aren't totally fucked if you're robbed, some kind of cushion for a slow month or six.  Even if you save house rent by sleeping in your store like Stewart on Big Bang Theory and "found" store fixtures "somewhere," you still have to eat.  And then the new year starts so rent goes up.  Again.  And then prices of utilities and products and everything else go up.  Again.

No wonder the stores are empty.

Last of the Middle Class's picture

America, greatest country on earth, turned to shit one day, suddenly, after a long trial of substituting political correctness for science. Viruses just don't give a shit about your political affiliations. (pun intended)

ilikepies's picture

Wow, world is completely fucked. I kinda wonder why these central banker pricks sit on their hands for so long why the carnage they cause makes maximum damage? Bring it all down already. 

firstdivision's picture

Still higher YoY, so non-event.

gatorengineer's picture

Need to make ammunition a subcategory....  Got Lead?

monopoly's picture

Been at least 3 months since we went to Kohl's. We just do not need any NEW stuff. Already have what we need. Remember us baby boomers do not wear suits, ties and expensive shoes anymore. We have our jeans, tennies, white socks and do not give a shit about looking all fancy as we shop at the grocery store. And there are Millions of us and 10,000 more every day. 

And how are young people, many who do not even have jobs going to keep this house of cards up. Thank goodness for sub-prime car and truck loans. That is the ticket. What a freaking mess. And it is all starting to unravel.

Omen IV's picture

"Thank goodness for sub-prime car and truck loans. That is the ticket"

The repos in the oil patch will spread eveywhere  - may be the cheapest car you will ever buy  - used -  relative to fair value

 

kareninca's picture

I went to the CVS pharmacy in Mountain View, CA (Silicon Valley) about ten days ago.  Its OTC medicine shelves were oddly empty.  It wasn't that they had nothing; they had many of the usual things; but it was all kind of spread out.  In the U.S. you get used to pharmacies that are packed with stuff to buy; this was definitely not.  That did not make things cheaper, however; stuff like bandaids and cold med were grossly overpriced as usual.  The place felt like it was dying.

InflammatoryResponse's picture

Kareninca,

 

yes indeed.  Walmart's by me have been doing that for YEARS now.  less stock more stuff spread out.  they don't have aisles packed with pallets of stuff any more.  you can actually steer AROUND the enormous fat people now. :)

 

ejmoosa's picture

That's the way the Target here is in Johns Creek GA.  That store alone could stock 50% more merchandise-but isn't.

So when you go, they do not have what you want and they cannot sell it to you.  THeir numbers drop, and then they cut back on future orders.

I expect the stores to start shrinking in size installation of partitions any day now.  Or subletting of space to third party vendors, if they can find any takers.  

Omen IV's picture

drugstore.com and those like it are killing these CVS et al guys - the prices are dramatically different

implosion of retail is accelerating - what will all these people do for a living?

 

NEOSERF's picture

Absolutely fuckin time to trot out two more Fed doves today...need to issue soothing words of calm and rate hikes "nowhere on the horizon" and "confidence in that unicorn which is called recovery"....we need talking heads NOW!!!!!!

pitterrier's picture

iPhone 6 cannibalized sales from millennial to gen X shoppers for the rest of the year.  Baby boomers are finished consuming and are massively downsizing in a low demand environment for the foreseeable future.  Discretionary shopping may be over for a generation or two.  Between flash mobs and Ebola who with any brains wants to go to a mall?

netpounder's picture

How do you make money with no money in this market?  You buy nothing.  Money saved is money earned ... bitchez!

Moribundus's picture

Keynesian spending isn’t the only way to fix a balance sheet recession and get consumer spending to kick back in. There’s the old biblical idea of a jubilee - a national cancellation of private debts. 

http://www.forbes.com/sites/erikkain/2011/10/05/could-national-debt-forg...

dobermangang's picture

The safest place in America might be the bathroom stalls at your local mall.  Nobody's gonna go there anymore.

Moribundus's picture

Each time a loan is taken out there is an increased demand for money in circulation to repay the interest on the loan. Before the loan was taken out this interest was not due, after the loan is taken out the interest is then due. Thus there is must be an increase in the supply of money now required to repay interest. 

 

This means that someone else somewhere else in the system must take out another loan if this demand for money to repay interest is to be met.

 

Thus more debt = more interest = more demand for money = more debt. 

 

Interest is repaid at a % rate this is why our economic system requires growth at a % rate. The amount of money in supply and our economic activity must grow at a % rate.

 

As our economy grows at a % rate the amount of resources we use also grows at a % rate. Take a look at Al Bartlett's talk on exponential growth.lThe amount of oil we are using has been growing at an exponential rate. 

 

Our population also has been growing at an exponential rate. Our demand for food and water is growing at an exponential rate, because of population growth.

 

Earth is finite and our resources are finite. Then,  there is age patern = older buy less and effect of accumulation of wealth= 1 super rich makes no equal economic activities as potentialy 1000's poor if they split those money. Even renewable resources have a limit to how much we can use at any one time, they require time for renewal. There is a limit to growth.

 

This is not an opinion, it is a mathematical fact. You can disagree with maths all you like, it doesn't make the math wrong.

Economy based on growth of debt is ponzi scheme. Good way would be debt jubilee and as Helicopter Ben planned to throw money out of copter. All is need to have enough military power to press other nations to produce goods and give printers to domestic population to print enough money to spent. Industrial activities are no need.