Economics
Good news no match for bad news
THE news organisations are trumpeting new retail sales data out of America. Here's breathless Bloomberg on heroic American shoppers:
Sales at U.S. retailers unexpectedly climbed in February as shoppers braved blizzards to get to the malls, signaling consumers will contribute more to economic growth.
Kind of makes your eyes well up a little, doesn't it? But of course, every silver lining has a cloud, and this one seems to have a rather dark and foreboding cumulonimbus. February retail sales were up, but only because January's sales were revised down by about $1.5 billion. Absent the revision, the February numbers would have constituted a decline. Meanwhile, over half of the year-over-year increase in retail sales in February is attributable to purchases of petrol; recall, again, that oil prices have essentially doubled from this time last year. And then there's this:
In gauging the economic recovery's trajectory, you shouldn't forget that this is not a normal tax season.
People who don't pay income tax are getting an extra $30 billion in refundable tax credits thanks to the Recovery Act, the Joint Committee on Taxation has estimated. Based on the timing of tax refunds in past years, well over half of that has likely been paid out already.
Mark Zandi, chief economist at Moody's Economy.com, said the extra serving of tax-season cash to modest-income families "helps explain the somewhat surprising strength in retail" in February...
And
Excluding AMT relief, Zandi figures peak stimulus hits this month or next.
This was a stimulus, remember, that was well short of Christina Romer's $1.2 trillion recommendation, which was itself computed based on data that underestimated job losses by about 1 million.
If that's not enough of a dark cloud for you, then there's also the fact that consumer confidence fell in March, for the second consecutive monthly decline. Recovery looks more uncertain by the day.
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Duh, rising commodities prices and a reduction in the flow of credit into the U.S. have everything to do with the slowed-down cycle. Those changes are, as they say, systemic. More people than ever are chasing diminished returns on commodoty exploitation, and more countries now prefer domestic investment over lending to foreign gluttons.
That's entropy for you. That cheaply-picked fruit and cheaply-cut meat and cheaply-made Wal-Pum has a bit of a hidden cost tail, don't it? Malthus was only wrong in the timing department.
Getting all worked up about unrevised numbers is one of the dumber media habits.
In this blog, our correspondents consider the fluctuations in the world economy and the policies intended to produce more booms than busts.
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