...or not! As can be seen in the chart below showing the change in Spanish retail sales, there is nothing like a tax hike, in this case "Value Added", to completely obliterate any hope of increased economic transactions, monetary velocity or, well, general prosperity. In the least surprising data point of the day, Spanish retail sales plunged at their fastest rate on record (12.6% YoY) to complete the 27th month in a row of YoY drops. This nation whose economy is struggling through its second recession in three years and plagued by chronically high unemployment, has seen only three months of positive YoY comps for retail spending since November 2007. Whether this is a nation retrenching pure-and-simple on the back of anti-growth policies or an increasing amount of retail sales are completed in the gray market is unclear (as we discussed here [6]); one thing is clear, Spain is bad and getting worse (bailout or no bailout), and as Reuters reports: "It's clear there are no signs the crisis is abating," economist at Nomura Silvio Peruzzo said. "The headline (retail) figures show a sharp drop and indicate that domestic demand is not going to be anywhere near what the government is anticipating."
[7]
Chart: Bloomberg