THE BASIS POINT

Retail Sales look fine but…

Retail
– Retail Sales (Month/Month) for February were +1.1%.
– Previous was +0.6%, revised from +0.4%.
– Retail Sales less autos (Month/Month) were +0.9%.
– Retail Sales less autos and gasoline (Month/Month) were +0.6%.

This is a positive report if one’s thinking extends no further than today. It remains to be seen how consumer spending in the longer run is affected by higher gas prices. Higher gas prices shift consumer spending from goods to energy. The production and retail of gasoline is not jobs intensive so a shift away from goods purchases is likely to hurt jobs.

Consumer spending is about two-thirds of GDP so this Retail Sales number looks good on the surface but has longer term negative implications.

ICSC-Goldman Store Sales (week ended 3/10)
– Store Sales, Week/Week change +0.7%
– Store Sales, Year/Year +2.3%

Redbook (week ended 3/10)
– Store Sales Year/Year change +3.3%

Business Inventories (January 2012)
– Inventories (Month/Month) +0.7%

NFIB Small Business Optimism Index (February 2012)
– Index is 94.3 up from 93.9 previous. Small business owners have shown greater optimism for six consecutive months.

FOMC
The FOMC meets today and their announcement is scheduled for 11:15 PDT. My fear is that with fiscal policy out of control we are past the point where monetary policy can be effective.