Retail Sales Plunge Twice As Much As Expected. Worst Back-To-Back Drop Since Oct 2009

Tyler Durden's picture

Following last month's narrative-crushing drop in retail sales, despite all that low interest rate low gas price stimulus, January was more of the same as hopeful expectations for a modest rebound were denied. Falling 0.8% (against a 0.9% drop in Dec), missing expectations of -0.4%, this is the worst back-to-back drop in retail sales since Oct 2009. Retail sales declined in 6 of the 13 categories.

Clearly it has been a very cold winter, with both December and now January big disappointments.

Retail sales disappoint, again

 

In worse back-to-back drop since oct 09...

 

The retal sales control group continues to crawl sequentially, while the relatively strong Y/Y data is still due to the base effect of December/January 2014 being slammed by the "Polar Vortex." If February spending does not pick up significantly, we will see a 2% handle.

 

The breakdown of sales by category shows that 6 of the 13 major categories posted a decline, but what was most surprising was the 1% drop in auto dealer retail sales, which slid 1% despite the low, low gas prices. Did subprime auto loans just run out?

 

* * *

Finally, none of the above should come to a surprise to those who read our article from Tuesday, previewing not only today's miss but explaining its reason as well:

Why Bank Of America Is Stumped: Despite "Lower Gas Prices" US Consumer Spending Has Plunged

One just has to laugh while reading the following hilarious attempt
to justify the cognitive dissonance by Bank of America's analysts - and
everyone else for that matter - who were oh so certain that tumbling (if
not any more) gas prices would translate into a "splurge" of spending
on non-gas related goods and instead, when looking at their internal
data, are seeing something inexplicable.

To be sure, it wasn't just BofA data that has shown a plunge in discretionary spending: the December retail sales report last month courtesy
of the government showed precisely the same, even if BofA's analysts -
and everyone else - rushed to describe as a "one-off" aberration which
would quickly be revised higher.

Well, it won't be. Because while the BLS may seasonally adjusted and
revise employment data to make the economy seem far stronger than it
really is, when it comes to spending, every dollar leaving one pocket
ends up in another pocket, and can thus be traced.

This is how Bank of America explains its total confusion why the US
consumer so desperately refuses to follow the "recovery" script.

Getting impatient

 

All signs point to a robust consumer: job growth has accelerated,
with an average of 336,000 jobs created a month over the prior three
months, gasoline prices have plunged and interest rates have declined.
Consumers are taking notice with sentiment measures climbing higher. According to the University of Michigan survey, consumers have not been this upbeat since January 2004,
when the economy was booming. The natural outcome should be for 
consumers to splurge, hitting the malls and going out to restaurants. But much to our surprise, the data suggest otherwise.

 

The BAC internal data show little improvement in expenditures in
January, even after netting out gasoline and autos. Sales ex-gasoline
and autos, on BAC credit and debit cards, was unchanged mom SA and have
slowed over the past few months (Chart of the Month). And it is not
unique to our data – the Census Bureau painted a weaker picture with the
December report (however, as we argue in this note, we think the risk
is that core control sales are revised higher on Thursday).

 

How can we explain this disconnect? It seems that consumers
are saving some of the windfall cash from lower gasoline prices, with
the personal savings rate increasing to 4.9% in December.
Another
factor is that our data may be skewed by consumers with credit cards
who are not as budget constrained as those who spend predominately with
cash. Looking at a breakdown of spending by key sectors, we find a
pick-up in sales at home improvement stores, restaurants and grocery
stores, but a slowdown in lodging and furniture sales.

 

And not just Bank of America. Moments ago Wells Fargo admitted the same:

  • WELLS FARGO & CO CFO: CONSUMER SAVINGS ON LOWER GASOLINE PRICES NOT TRANSLATING INTO A PROPORTIONAL INCREASE IN SPENDING

And do you know why? Because, as we explained many months ago, not only is there not going to be an increase in discretionary spending, but all the "excess" money will be spent on - you guessed it - undiscretionary Obamcare, i.e., the government's latest tax for the middle class:

The same Obamcare which already led to a surge in GDP in both Q3 and
Q4. And sadly for the propaganda-mongers, not even the BEA can
triple-count seasonally-adjusted or actual data.  That... and $1.1
trillion in student debt certainly doesn't help either.

In other words, expect yet another conspiracy theory to become unconspiracy fact in 5... 4... 3...

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Bill of Rights's picture

" The State of our Union is strong "

 

Oldwood's picture

Consumers are just resting up for the next big push FORWARD!

BTFD

This is fucking easy...anyone can do it.

I feel like such a fool going to work today when I could just stay home and buy stocks for a living. dope.

Hans117's picture

Yup BTFD! Just wait until QE4 then you can really ride it to the moon!

cossack55's picture

They could make the numbers look so much better if they put Goodwill and garage sales in the hopper.

FL_Conservative's picture

Nothing to see here.  Please move along.

knukles's picture

Steve Liesman said it was OK because of this and that and somethin' or other.  I think .
That or I pooped my pants

cnmcdee's picture

Looks like the nail gun is frozen...

Arnold's picture

Who Knew the future could be so predictable.

How can we monetize it?

Never One Roach's picture

CNBC explains it plain and simple: there's alot of money sitting on the sidelines.

 

Gafaw ... Gafaw ... Gafaw ....

Richard Chesler's picture

Obozocare!

Obozocare!

Obozocare!

 

10mm's picture

Why even bother working in the place. It's a job for secondary income workers, that's all.

silverer's picture

I know a guy who had been working at Staples.  He was doing a great job for them.  I met him due to using their shipping dept. for UPS packages.  He always went the extra mile, and did more than what the job asked.  After about six months of seeing this, I offered him some part time hours in my own company, at much higher pay, but could only employ him during warm months.  He decided to strike out and leave the Phila. PA area to move to upstate NY, reasoning that on his full time pay at Staples, he could afford to live in that area (he did have an uncle up there).  So he bought a two family house for only $80K, with plans to rennovate and rent 1/2 the house.  His father was making the three and a half hour trips up there on weekends, and they had the whole project about 85% complete.  That was when Staples decided to eliminate some job positions.  Highest paid go first, of course.  And this was about a year BEFORE Obamacare, so he was guaranteed not to have a future with that company.  Anyway, it all collapsed on him with the loss of his job, and the death of his father from cancer, so now he lives at home with Mom and babysits his sister's kids so she can go to work, and he sells what he can from home.  That's a nice hope and change story, huh?  Unfortunately, these kind of stories are becoming more common.  And by the way, Obama wants to raise taxes.

Colonel Walter E Kurtz's picture

Plug and play with these type of firms and it makes me ill silverer. That individual was an asset to the business but it does not matter. All they have to do is get the next warm body in there to fill the position, even if they do half the work. If you do not like the next person, what are you going to do, go to the local owned business supply company operating across the street. Oh that's right, they had to close, because these friggin' firms (like Staples) do not have to operate on the profit principle. 

 

froze25's picture

But, But, But Obama love the poor folks.  The TV News people in nice suites told me so.  Stop being racist.

JuliaS's picture

All of the kids that I get to see in my line of work act like 2008 never happened - they get into volatile professions and sign mortgages as soon as the first paycheque arrives. Most don't even have families yet, but are all echoing the same old mantra that renting means throwing money away.

Well, I'm in film and television and most contracts are 6 months long. Long-term employment does not exist. Often takes half a year to find another half a year job. One has to move all over the country. Go to other countries even. Signing a mortgage that amounts to obligation to be stably employed and healthy for decades straight? Only an idiot (or speculator) would do that. I actually have more respect for speculators there. They're in it for a quick buck. You either win or loose. It's not a part of their deep life philosophy... but these kids, I tell ya. Not even kids...

Had a mid 40's co-worker sign a mortgage less than a month before getting canned. No amount of yelling in his face did anything. I told him he'd be an idiot to buy, and after he bought I once again reiterated.

What the hell are those people thinking? I quote ZH straight to their faces and don't sugarcoat it...

... and to cut the long story short - that's why I don't have any real friends.

BeansMcGreens's picture

@GetZeeGold

It use to be 29.5 hr/wk.......looks like the rules have changed.

 

At the bottom of your businessinsider story about Staples firing workers who work more than twenty-five hours was this:

NOW WATCH: Watch Out Lululemon — Women Are Going Crazy Over These No-Underwear Yoga Pants

america, a great country or what!!!!!

Momauguin Joe's picture

How's that wealth inequality working out for you?

TheRideNeverEnds's picture

In fairness, when Obama said that he meant the union of bankers and government.

Tsar Pointless's picture

You just beat me to it!

We're off and running today. Equities: Up. Oil: Up. Bond yields: Up.

Err - that last one may not fit the narrative, but oh well. You can have everything in life with the right amount of QE.

Get to work, Mr. Yellen!

Dr. Engali's picture

But all that extra savings from lower gas prices was supposed to be a boon to the poor fuckers who have no money. The recovery is just around the corner bitchez!

Arnold's picture

Lot of pot hole road 'fore we hit the corner.

Carry on, full throttle.

froze25's picture

The corner of the cliff, that corner.

Southside Stacker's picture

Welp, that did it, my morning laugh.  Very funny.  I hope you don't mind but, as Grouch Marx once said, I know a good joke when I steal one-so I'm going to lift this one.

papaswamp's picture

Winning-er-est-ish..... Or the weather...

overmedicatedundersexed's picture

cnbc: bullish, not buying means plenty of money on the sidelines..vomitorium talking heads

IronShield's picture

What is this thing called 'Retail'?

B2u's picture

folks bought some stuff, but not enough....

Doubleguns's picture

I can only afford one obamacare policy. Isn't that enough.

mayhem_korner's picture

 

 

...or they returned a lot more of the illusory holiday spending "spree"...

Wm the Shrubber's picture

Awesome!  Keeps Fed on sidelines.  Buy more stocks!  There is never any bad news; it's only a matter or perspective!

NoIdea's picture

Consumers are clearly saving their money for a February spending boom (or March or April...December). Has to be bullish because stocks are still higher pre market.

overmedicatedundersexed's picture

saving for IRS extortion..obuma care fines and no exemptions..with the damn printers why do they need my fiat bucks ..just go print them you will anyway..

froze25's picture

Because if you have too many of them you may improve your life or the lives around you without thier "help".  Can't have that.

Fix It Again Timmy's picture

Stepping back into the WayBack machine for a moment - Wasn't it Henry Ford who realized that if he wanted to sell cars, he would have to pay his workers a decent wage? Now, Back to the Future: No Jobs - No Wages - No Sales - No Profits.....DUH!......

Mitch Comestein's picture

Ah, great narrative ZH.  However, did you notice in the detail it is all from retail gas sales.  Same with the month before.  Ah, well....that makes sense.  

 

Queue the -1's........NOW.

madcows's picture

what percentage of that drop is due to gas stations?

the other categories look mixed.

i say it's more muddling along than collapsing.

froze25's picture

Wait until the emerging market countries start defaulting due to the low oil and low commodity prices.  Its coming.  Remember that country Venezuela their is a reason you hear nothing about it any more.  Totally imploding. 

Comte d'herblay's picture

yada....weather....yada...

dobermangang's picture

The masses are waiting for all the "Going Out of Business" sales this year.

mtl4's picture

Deflation = hoarding cash = drop in retail sales..........this isn't rocket science BOA!

 

Coming soon to a debt market near you.

thismarketisrigged's picture

stawks are bound to hit 18000 today and 2100 respectively.

 

there is no such thing as bad news, everything is great news for the economy. high oil prices r good , low oil prices r good, a bad retail sales number is good, as is a good one good, its all fucking good.

 

the fucking dax is up fucking 12 percent in 2015, can someone please fucking explain this shit to me?

youngman's picture

Because when the Euro fails...the German stocks will be worth more than the Greek stocks...or Italians....when they bring out their own currency again