Retail Sales Badly Miss Expectations, Why?

Mish

Not only did retail sales slow dramatically in August, but there were significant downward revisions in July.

Percent Change From Previous Month

Percent Change in Advance Retail Sales August 2020

Negative Surprise

The Advance Retail and Food Services report surprised to the downside today vs Econoday Consensus Expectations.

Totals were about 30-40% under projections and that is on top of huge negative revisions for July.

The "control group" projections were not even in the ballpark at -0.2% vs expectations of a 0.5% bounce.

The control group is an input into the consumer spending component of GDP and excludes food services, autos, gasoline and building materials. 

What Happened?

On July 25, Pandemic assistance checks of $600 per week ran out. 

About 30 million people were collecting checks.

30 million * $600 per week * 5 weeks = $90 billion.

Some of those people went back to work, but many of them didn't.

When I looked at the projections last night I thought they were off. 

The Cliff

Some thinking individuals saved some of their pandemic checks, and some others went back to work.

The rest faced the cliff. September rates to be worse.

Mish 

Comments (19)
No. 1-8
Herkie
Herkie

Mish, even when they do get some money coming in be it from work or whatever, they are so behind on car payments, rent, mortgages, they can't just head to the mall or WhaleMart to spend spend spend! That is where the next stimulus check will go to as well if they ever pass it. I can't see Moscow Mitch allowing that but there is fresh hope they have reached an agreement. After the way Nancy Pelosi criticized him and his emaciated support bill he may be in too much of a snit to care if people starve or go homeless.

KidHorn
KidHorn

Mish,
I think you're right. The $600/mo bonus explains everything.

Herkie
Herkie

So, I go over to CNBC and see this:

Options traders see Walmart+ leading to huge gains for the retail giant

“We saw calls outpace puts by more than 11-to-1. One of the examples of activity that we saw were the Sept. 25 weekly 148-strike calls. Those are the calls that are going to expire a week from this coming Friday. One of the buyers of those paid a little over 70 cents for about 1,000 of those,” Optimize Advisors CIO Michael Khouw said Tuesday on CNBC’s “Fast Money.”

We will see. If the Trump depression gets any worse or god forbid he found a way to not go to prison in January I can see WalMart going the way of KMart instead of trying to become the next Amazon. Which they deny. I know I rearely even go to the WalMart near my house anymore, it is dirty, small, poorly lit, badly stocked, lots of empty shelves, they are putting NOTHING into maintaining the place, so I am thinking they have it slated for closure.

Eddie_T
Eddie_T

$90 Billion spent wisely and a few trillion to the cronies....seems about par for the course. It just goes to show how much good a stimulus can do when it goes to the right place....it not only did a lot for working stiffs to prevent a complete collapse....it took some pressure off mom and pop employers, who are normally on the hook for half of unemployment, at least in my state.

But it stopped too soon, and the Republicans are singing the austerity song again....so we have a cliff to fall off of before they come to their senses....with elections looming, I look for money give-aways to get way more popular.

The payroll tax deferment is going to be a disaster. Where do they think the money is going to come from for people who have never had to put back a dime to pay taxes before in their lives....to catch up?

PecuniaNonOlet
PecuniaNonOlet

47 days till election.

Zardoz
Zardoz

Winter is coming.

Six000mileyear
Six000mileyear

The expiration of PPP is more of a cliff than the $600/week "stimulus" check. Raytheon Technologies this week announced it is letting go nearly DOUBLE of what they estimated in a July announcement for their Pratt-Whitney and Collins commercial aerospace divisions. This amounts to a 17-20% reduction in headcount. In addition to 15000 positions, local machine shops are feeling the shock waves as orders shrink or get cancelled. This is a big hit to Connecticut.

Casual_Observer
Casual_Observer

Missed compared to what ? Literally everything is unpredictable under Trump. Businesses can't have this level of uncertainty in order to make accurate forecasts and operations.


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