Retail Sales Confirms Consumer Weakness
March retail sales which came at 0.4%, below expectations of 0.5%, and down from an upward revised 1.1% February, confirm that the economy in Q1 slowed down materially toward the end, and was certainly not as hot as had been predicted early in 2011. This was the lowest improvement since June 2010. The number was offset by the "ex autos and gas" number which came at 0.6%, better than expected, although with ever more capital being diverted to gas purchases this is of little comfort to those who have to actually BUY gas. The biggest weakness was in auto sales which dropped by a substantial 1.7%. Retail sales increased a modest 0.3% (and retail and food total up 0.4%). Gasoline stations saw another sizable increase of 2.6% sequentially and 16.7% from a year earlier. Food and beverage stores were among the weakest posting just a 0.1% increase in March.
In other words, and as the chart hereto shows, the consumer is spending most of their money at the gas pump and on food and they aren't out shopping for new cars as GM continues to show inventory into the dealer pipeline - same thing they did just before the last crash - to prop up their earnings numbers.
The consumer is going back to saving money and trying to deleverage debt as much as possible as in their mind it is simply a race against time before the economy sinks and they are left holding the proverbial bag.