December 26, 2007

Does 2.4 Really Lack Luster?

The WSJ News pages report "Stocks Drop on Weak Retail." Huh? I had heard that they were up 3.8% YOY -- not bad for the middle of a housing recession that has most Americans living in Tent Cities.

The next article points out that the 3.8 figure was 3.6 and that it included lots of expensive gas.

The 11th-hour rush helped strengthen a weak holiday season. From the day after Thanksgiving to midnight Monday, total retail sales, excluding automobiles, rose 3.6% over the previous year, according to MasterCard SpendingPulse, a unit of MasterCard Advisors. But factoring out spending on gasoline -- which soared thanks to a 27% average price increase since this time last year -- retail sales increased a lackluster 2.4%. Industry forecasts had predicted gains of 3.5% to as high as 4.5%.

Maybe you don't throw a party for 2.4%. or give your staff the week off. But the mercenary bears on Kudlow & Co. have been saying that the recession has already started and that the consumer has thrown in the MasterCard. I think 2.4 growth in a difficult year is a pretty good sign.

Economics and Markets Posted by John Kranz at December 26, 2007 11:07 AM

One of my economics commandments: thou shalt not measure an economy by consumer spending alone.

Spending doesn't matter as long as the economy grows overall. Employment, REAL employment that creates well, depends as much on savings as on spending.

Posted by: Perry Eidelbus at December 26, 2007 3:46 PM

I should add: GASOLINE COUNTS AS MUCH AS ANYTHING ELSE! It counts as much to economic growth as groceries, rent and business investment.

Posted by: Perry Eidelbus at December 26, 2007 3:47 PM | What do you think? [2]