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Japan Retail Sales Plunge Most Ever On Base Effect, Widespread Economic Weakness
Overnight we got the latest proof that there is nothing worse for an economy than to be run by a bunch of central planning academics who get "advice" from Paul Krugman. The reason: Japan's retail sales which crashed by 9.7% Y/Y, the biggest annual drop in history. To be sure, the biggest reason for the annual drop was the base effect with the surge in demand last March ahead of the April 2014 consumption tax hike.
... but the drop was bigger than what consensus had expected, as expectations were for a -7.3% drop.
And confirming that things are getting worse on a sequential basis as well, was the 1.9% drop in sales in March compared to a 0.7% increase in February. In fact, as the chart below show, on an indexed basis, the March retail sales print was one of the worst since last year's tax hike.
And while lower gasoline prices courtesy of sliding crude (if not any more) translate directly into a decline in sales value, because retail sales are calculated on a nominal basis, in March gasoline prices stabilized, with the result that fuel sales were down only 0.8% mom in March, versus -2.6% in February and -10.9% in January.
In fact, as Goldman breaks it down, the retail sales weakness was due to lack of purchasing across the board as Japan's shellshocked population no longer wishes to be part of the great Abenomics experiment:
- Auto sales decreased 6.0% mom (February: -2.1%), pushing down overall retail sales by 0.8 pp.
- Sales of food & beverages (30% of total retail sales) fell 1.4% mom (February: +0.3%), depressing overall sales by 0.5 pp.
- For the Jan-Mar quarter, retail sales declined 2.1% qoq (Oct-Dec: +1.0%) despite a surge in consumer spending by Asian visitors to Japan during the Lunar New Year holidays. This marked the first quarterly decrease since Apr-Jun 2014 (-7.1% qoq), when sales fell in the wake of the consumption tax hike, and indicates that consumer spending recovery momentum is weak.
So what is Japan's response to the worst spending report in one year: hope that tourists will pick the spending baton. To wit: Japan retail sales may rebound over the next year as the negative impact from the sales tax hike fades and salaries rise amid a tight labor market, says Takeshi Minami, chief economist at Norinchukin Research Institute.
"Purchasing by foreign visitors, supported by yen depreciation, may push baseline of retail sales up,” Tokyo-based Minami says in interview; however "only large stores in big city areas may be blessed with foreign visitors’ demand”
In other words, all hope for Fukushima and any city or store, no matter how large, in a 30 kilometer radius, is now gone.
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To the Central Bankers this proves they are right..they just needed to do MORE.....to someone who studied the hyperinflation of Germany....this is called losing faith in the fiat...
Nahh.. It's all the radiation..
It's not much better here in America, sans the radiation.
But when you're printing damn near a trillion a month in QE, you can hide it pretty good.
Time to go full Krugman and triple QE. This will make matters all better. Come on Abe what other option do you have, just finish it you Krugman cock sucker.
Wouldn't be so bad if some of it trickled down from the Bnkers and Wall Street to the Middle Class private sector.
fooook yuuuu, dorphins!
Now, that being said, the iWatch is just around the corner, and that will save global GDP, so no worries. Yeah, right. A freakin 10% retail dump is insane ... that is a consumer base only buying basic requirements, anymore. Perhaps they are waiting for the latest sex robots to come out (also a requirement, but the latest ones can say "I love you, baby" like they mean it).
Not to mention how it will irreversably scramble the brains of it's users via the fat finger trade.
Like Harry Dent and his Demographic Cliff books or not his statistics are noteworthy - a 70 year old spends less than a 16 year old in terms of GDP.
Since Japan ardently refused to allow the real estate mania bubble to collapse in 1982 and kept housing very expensive (to protect the bank) an entire generation grew up unable to afford a home.
So the men stopped, stopped buying houses, stopped buying anything. Stopped having kids, the men do not date and when they don't date they don't knock women up, and when women do not get knocked up you do not have a future generatoin of tax slaves to support your burgeoning infrastructure of pensions.
Well insanity has been forever unsustainable, try living well over a hundred years and see how much more productive one can be, even in their old/young looking, age.
Japan has absolutly crushed small business. Stick a fork in the Yen, its as done as the US dollar.
Just think how much better next month's comps are going to look.
Beating expectations ALL the way down.
Exactly, so if sales were down 6%, expectations beat. Break out the champagne.
and now theres 15 million people that just want to be the next oldest living person...and they do not buy much
Plus, they're so old and poor they just sit at home watching Zato Ichi re-runs from the 60's. It's like the old broke merikans sitting at home at night drinking a beer staring at Carol Burnet and Smothers Brothers re-runs.
Fantasy is more than just a land, it's dream not come true.
Now, how does goldman's computer interpret this data vs Citadel's computer so that trading in the "market" today can begin.
The code is something like this:
. . . . . if Headline = {BAD} Then "BUY"
. . . . . elseif Headline = {GOOD} Then "BUY"
. . . . . elseif RetailSales = {BAD} Then "BUY"
. . . . . elseif RetailSales = {GOOD} Then "BUY"
. . . . . elseif Rates = {DOWN} Then "BUY"
. . . . . elseif Rates = {UP} Then "BUY"
. . . . . elseif Weather = {SUNNY} Then "BUY"
. . . . . elseif Weather = {SNOW} Then "BUY"
. . . . . else "BUY"
dbl post, sorry
visit sunny fukushima, leave with a healthy glow.
"Biggest drop in history". Since Lehman is so 2014.
Anyone notice hong kong import exports? Both shit the bed.
Wow, worse than the Tunami drop and this one is man made.
That is called a Krugman! Ooops just did a Krugman! Who would think high tax and Zero interest would hurt sales....hmmm
MOAR!!!
Time for the amazing Krugmonster to pay Japan another visit...