Earlier today we warned readers that based on actual credit card spending data [4], today's retail sales data would continue the worst trend since Lehman...
Ahead of today's retail sales report, BofA found February sales ex autos and gas to be weakest since Jan 2014 http://t.co/qrgVkNkUsa [5]
— zerohedge (@zerohedge) March 12, 2015 [6]
... and sure enough that's what happened: moments ago the Commerce department reported that in February, retail sales missed once again and missed big and across the board, the third big miss in a row, with the headline print coming at -0.6%, far below the 0.3% expected, and in line with the -0.8% drop last month. Putting the headline numbers in context: December -0.9%, January -0.8%, February -0.6%. Surely a great time for the Fed to hike.
Excluding the volatile autos and gas, sales dropped once again, sliding -0.2%, below the 0.3% expected - in fact below the lowest estimate - and worse even than last month's downward revised -0.1% decline. And with that the worst run in retail sales since Lehman is now in the record books.
How the Fed's rate-hike "reaction function" responds to this data is up to Yellen.
[7]
And now we expect economists who once again were completely clueless to suddenly remember that, oh wait, it did snow in February - the same month in which they were setting their forecasts for the month, and that all those forecasts were really off because they had no idea, no idea, it snowed at the time.
As previously reported, the subrpime auto loan bonanza is over, and sure enough, Autos led the February drop, although as the chart below shows, there is still a long way down for Y/Y auto sales data to catch down to trend:
[8]
The breakdown in sales shows a decline in most major categories, with the drop most acute in autos (-2.5%) and building materials (-2.3%), but declines were also reported in furniture, food and drinking, health and personal and general merchandise sales. In short - pretty much most places expect internet sales which rose 2.2%, and sporting goods sales which saw a 2.3% increase.
[9]
Finally, the all important control group which plugs into the GDP calculation posted an unchanged, 0.0% print, with the previous revised from 0.1% to -0.1%. It was expected to rise 0.4%.
[10]
Expect a slew of downward Q1 GDP forecast revisions to start within moments, as every highly-paid sell-side economist realizes what we said last week: [11]that the Atlanta Fed's 1.2% Q1 GDP forecast [12](a number which will now be revised even lower) will prove to be spot on, if not overly optimistic.
