This page has been archived and commenting is disabled.
The Curious Case Of "Strong" Retail Sales: Is The US Already Applying "Double" Seasonal Adjustments
There was some confusion why following yesterday's stronger than expected retail sales, which broke a 4-month series of disappointing data and which according to most economists were good enough to bring forward the Fed's first rate hike in a trader generation, bond yields tumbled.
Well, in the aftermath of the whole "double seasonal-adjustment" travesty, in which even the BEA admitted any bad economic data (read Q1 GDP) will be "massaged" enough until it becomes good under the "scientific" pretext of "residual seasonality", and following the suggestion of Dynamika Capital's Alexander Giryavets, we decided to take a look at not seasonally adjusted retail sales.
We found something interesting.
The thing about retail sales is that while they are supposed to smooth out month-to-month changes in any given data series, they should be virtually identical on a annual, year-over-year basis. After all the same "seasonal" adjustment that was applicable this May, was applicable last May, the May before it, and so on, unless of course, there was some massive, climatic or otherwise shift to the underlying reality.
To the best of our knowledge there wasn't.
And indeed, when looking at the annual change in headline retail sales data we find that, as expected, the seasonally-adjusted (blue) and unadjusted (red)retail sales series are almost identical...
... but not quite.
If one zooms in on the most recent data, one finds something surprising: a substantial rebound in SA retail sales, which according to the Dept. of Commerce rose 2.7% while unadjusted retail sales rose by just 1.0%, the worst montly print in over two years and hardly inspiring confidence that the economy is strong enough for the Fed to engage in a rate hike.
To isolate the problem we decided to look at only the annual (YoY) change in May data. The chart below shows the surprising finding: while every year for the past 4 years the Unadjusted May data was equal to or stronger than the Adjusted retail sales print, in May of 2015 this was reversed, and quite substantially.
To show just how much of an outlier May 2015 was compared to May in prior years, here is the seasonal "adjustment ratio" for the month of May for every year from 2008 to 2015, by which we define the ratio of "seasonally adjusted" to "unadjusted" retail sales. Spotting the outlier should be easy enough.
So, our question: while we know that the US Department of Truth, err. Commerce, will soon adjust GDP data for all weak quarters higher just so the narrative of a rebounding economy isn't lost when one looks at the actual fact, has this "residual seasonality" adjustment already been applied to retail sales? Because we fail to understand just why the seasonal adjustment to May retail data should be as profound as shown above.
Source: (Double?) Seasonally-Adjusted and Unadjusted retail sales
»
- 22821 reads
- Printer-friendly version
- Send to friend
- advertisements -
so that's where all the Enron accountants went
Dear Bank,
After I seasonally adjust my checking account I see that my balance is substainaly higher than you indicate. Please use the Department of Commerce rules to make the necessary adjustment. Please have this completed soon as I have gone shopping.
Dear Customer,
We do no see you on our list of donors. Please provide which lobby group you work for to have this resolved.
Imitation is the sincerest form of flattery.
We adjusted some folks
I expected that.
What a joke...only the governments and their traders playing with MY financial future pay attention to this shit...
Any spending going on MUST be predominantly on CREDIT. Everyone I know is hunkering down, budget shopping and pinching pennies.
""Double" Seasonal Adjustments"
Double Secret Probation...
What kills me is it's never "adjusted" the other way.
Oh look, the data is too good. better adjust it down some!
Notgonnahappen.
My wife bought the kids new underwear and socks the other day. I need to tell her to spread that spending over many months or she'll skew the numbers. Maybe she's the one that dumps tons of gold on the market all at once every now and then???
So we're just making up random numbers now. Reality is going to suck so hard.
That is reality and yes it sucks
Imitation is the sincerest form of flattery.
They are going to bleed you dry with their lies and then they are going to kill ya. They are banksters. That's what banksters do.
What do you expect from the tag team rubin-summers, truth? Have you seen summers on TV? Do you trust that individual?
Government statistics no longer have any relevance because they cannot be trusted. As a result, any information "gleaned" from said reports or conclusions derived, are just propaganda created by the Ministry. If you can find the raw, unmassged number, you will find generally the opposite of whatever meme is being pushed by TPTB.
Also heard that Jobs were plentiful and wages were rising. Not in my neck of the woods.
Doubly seasonally DGAF
Someone is screwing the stats???
Maybe that new H-1B accountant got "trained"
No Russian artillery shells will ever reach Berlin!
-- doubly seasonally adjusted press release from the Fuhrer Bunker, May 1945
Damn Zerohedge! Always turning sunny days into rainy days. Well, Nah, Nah, Nah, I brought an umbrella (Chinese of course).
why, O why, is there ever an adjusted number for any govt stat? what is the rationale for it (the public one at least)? just print the freaking raw number and let the private sector infer from it and/or adjust it however it wants. if there's a legitimate reason to smooth data then others will do it as needed.
the UE numbers are the ones that drive me the most insane - we have access to payroll/tax data for the entire country on a near real-time basis, but UE is generated from a small sample of surveys and guesstimations about how many businesses launched and folded.
"why, O why, is there ever an adjusted number for any govt stat? what is the rationale for it"
The "rationale" is cover for theft and murder.
General Axiom of Government #3: "Being nothing more than a criminal syndicate, government can only produce 4 things: Poverty, misery, death, and lies. All statements otherwise are lies."
The axioms are foundational. When one understand the true nature of government, they then can see what is hidden by government. Ditto Zion.
Liberty is a demand. Tyranny is submission..
I could have sworn this was about global climate war-mongering change propaganda.
"while every year for the past 4 years theUnadjusted May data was equal to or stronger than the Adjusted retail sales print, in May of 2015 this was reversed, and quite substantially."
Say what?
may 2015 retail sales unadjusted ... $463.124 billion
may 2015 retail sales adjusted ... $444.926 billion
and no "mystery" on seasonal adjustments ... Census Bureau gives them out YEARS in advance.
http://www.census.gov/retail/marts/www/adv44x72.txt
all you do is take unadjusted number and divide by seasonal factor to get adjusted.
I do, however, have a beef with what number census comes up with ... may 2015 should have adjusted further down due to the "5s" ... 5 fridays (payday) 5 saturdays/sundays (when much of large durable good purchases made)
expect "experts" to be surprised at weak june with only "4s" for fri - sun
You do realize the Entire post is about annual change right?
I love long summer evenings when the crickets come out ...
Huh? I don't understand how this applies. The article says:
"The thing about retail sales is that while they are supposed to smooth out month-to-month changes in any given data series, they should be virtually identical on a annual, year-over-year basis. After all the same "seasonal" adjustment that was applicable this May, was applicable last May, the May before it, and so on ..."
Applicable in May, to May, year after year. The above comment seems to have a point or (as is likely) I also missed something.
Yes. So?
I always cringe when you guys talk about seasonal adjustments.
"The thing about retail sales is that while they are supposed to smooth out month-to-month changes in any given data series, they should be virtually identical on a annual, year-over-year basis. After all the same "seasonal" adjustment that was applicable this May, was applicable last May, the May before it, and so on,"
This is so wrong. Even on year over year basis need an adjustment. Why? Variety of factors. Number of business days in month changing. Where a holiday falls in a week (heck, sometimes Easter in march or april). Etc
As everybody knows, when gift cards are sold, they are not counted as retail sales. They are not so counted until the customer comes to the store (or web site) and buys something.
How easy would it be for the current crop of crooks to accidently count gift cards twice. Once when they were originally sold; and once they are used to buy the crap we need so much.
Have you seen this?
http://nypost.com/2014/01/26/unused-gift-cards-total-44b-since-2008-study/
GIFT CARDS ARE A MOTHERLOAD OF DECEIT FOR COOKING THE BOOKS.
just sayin'
- 1
Baby, Oh, I forgot you haven't used the Toys R Us gift card we got you last Hanukkah.
Mommy and I will take you to the mall real soon.
Promise