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David A. Rosenberg
Chief Economist & Strategist 		Gluskin Sheff
Market Musings & Data Deciphering
Lunch with Dave


August 13, 2009

Please note, due to business travel, our next publication date will be Monday, August 17

U.S. July Retail Sales report, in a word .... Simply Awful
We actually just got the retail sales data for July and in a word, they were simply awful. We can have all the inventory building in the world but it can't last without a revival in final sales. Retail sales were supposed to be up 0.8% MoM, according to the consensus, but instead fell 0.1%. The breadth of the decline was amazing — only autos (+2.4% — due to Cash for Clunkers), clothing (+0.6%, but that only partially reversed the 1.5% slide in June), restaurants (+0.4%, after a 0.2% drop in June) and drug stores (+0.7% — the third increase in a row, so this is an area of retail sales is worth being excited about).

"Retail control", which is the headline excluding gasoline, building materials and autos, and goes into the consumer spending segment in the GDP data, fell 0.2% MoM and is flat or down in each of the past five months, and this was in the face of some pretty massive fiscal stimulus. So far in 3Q, retail control has declined at a 1.3% annual rate. So for the current quarter, GDP gets a boost from inventory building but 4Q could be flat or negative in the absence of a consumer pickup.

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