Tuesday, September 15, 2009

Is The Commerce Department Fabricating Its August Sales Numbers?

The headlines for the Government-reported retail sales number loudly announced that "retail sales jumped 2.7% in August."  Remember that this is a month to month number, so the August sales number is being compared to the July sales reading.  NOT in the headline everyone sees:  sales for August 2009 were down 5.3% compared to August 2008.  So much for the green shoots of sales growth. 

At first blush, this number for August is not very good when you consider that the Government spent close to $3 billion of your money in August trying to stimulate automobile sales.  This worked to some degree, as auto sales for August rose 10.6%.  That's compared to July.   The other large component of the 2.7% sales increase was the price of gasoline.  In the second half of July, the price of gasoline jumped over 8%.  The Government number does not strip out this inflation effect from its headline-reported number.

But the biggest question I have about the Government's number, and its ubiquitious - if not nefarious - "seasonal adjustment," is that the reported number for August in NO WAY is consistent with the sales numbers reported by big retailers for August OR the rapidly declining trend in consumer credit, which was down over 10% in July (not yet tabulated for August).  The news release I read reported "busy shopping malls in August."  Here are big mall retailer numbers for August - you decide:

Abercrombie and Fitch -23%, GAP -2%, Hot Topic -7%, JC Penney -5.6%, Limited -4.6%,
Macy's -8.5%, Neiman Marcus -15.3%, Nordstrom -3%, Saks -18.2%

Get the picture?  And we don't have the consumer credit number for August, but consumer credit outstanding has been dropping like a rock since the beginning of 2009.  Here's chart that shows consumer credit vs. consumer spending (click to enlarge):

I know several people who told me they actually had their credit card lines cut last month.
Is there any reason to believe that consumers miraculously decided to take on more revolving debt in August, other than to buy a taxpayer-subsidized car?  We sure didn't see that, if it really happened, in the big retailer numbers in August.  This just in:  Mastercard announces that their processed volumn was down 8% in July and August - more proof the Government sales number is b.s.: 

Article Link

I seriously doubt that the August retail sales numbers, in reality, showed anywhere near the amount growth as reported by the Government's Commerce Department.  What I would like see is how the Commerce Department calculates its seasonal adjustments AND the numbers being fed into that calculation.  As it stands now, based on the evidence I presented above, I would say that the Government is full of you know what.


  1. An out and out lie by the U.S. ministers of economic information? Well, that, money printing, and the desperate dispensing of massive doses of putrid propaganda, (pardon my purple prose) are about all they have left.

  2. Edwardo, they should give George Orwell a posthumous Nobel Prize for his foresight in prophesizing what would happen in this country.