Mixing auto and gas sales into retail numbers often results in a bad chemical reaction, and we've probably never seen a better example.
By "we," of course, I mean you and I. The business media are, as always, singing their eyebrows on the resulting explosion.
If you want to know what retailers such as
are up against (and what they have going for them), listen up.
Retail sales numbers were reported on Friday, and the headlines were big and scary. So were much of the underlying articles.
The problem is that auto and gas sales are poured into the retail numbers. Gas can be remarkably volatile, and boy, was it down in November. A lot less was spent on gas at the retail/gas station level, but it was because of that lower price. It had nothing to do with lack of demand.
Auto sales can be volatile too, though less so than gas. In the current environment, with the credit markets nearly frozen, with households weary of taking on more debt and with auto companies possibly going soft-white-underbelly-up and scaring away buyers, auto sales are in full collapse mode. They were down more than 25% from the previous November.
So if we want to get a good bead on what retail stores are doing, don't you think it might pay to take a prominent look at what sales were like without the flukish volatility of gas and autos? That's not to say we ignore gas and autos altogether. But if you lump them in too carelessly with retail stores, don't you think the number you come away with will be big, scary and unreliable?
Look at the abject hopelessness, the grinding disappointment of this
Retail sales fall 1.8% in fifth straight decline: Falling gas prices exaggerate drop in spending in November
About halfway down, you get this: "Excluding both autos and gas, retail sales increased 0.3%, the first increase since July."
Come again? An increase in retail sales? A possible sign of life? There was a lot of discounting going on in November, so the savvy investor will keep that in mind when looking at raw sales numbers. But surely, even allowing for discounting, this is notable, no?
The New York Times
failed to note it in a headline, declaring flatly: "
Even as the article unfolded, it told the truth too slowly. The first mention we got of something going on without the volatile, unreliable contributions of gas and energy came when the article removed only automobile sales. This put retail sales at down 1.6%.
How about taking gas out, too?
A lead from the
was even worse,
, both in dire undertones, but not looking at the numbers in any pure chemical form:
"Consumers cut back on spending at retail stores for a record fifth straight month in November, another sign the recession that is already the longest in a quarter-century will translate into a dismal holiday shopping season."
It took till the third-to-last sentence to get this: "Sales at department stores and general merchandise stores actually showed an increase of 1.2 percent in November."
"That performance," we are then told, "was a surprise." But if it's a surprise, something unexpected, shouldn't it be mentioned earlier?
Everyone should know that if you mix plummeting gas and car sales into retail numbers, you'll come away with an ugly concoction. But savvy investors always need to focus on what everyone doesn't know, even when the business media, those current-trend-following little devils, bury it.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven' column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
to send him an email.