Retail sales drop, inventories rise in May

posted at 11:25 am on June 14, 2011 by Ed Morrissey

In order to see a real economic recovery looming, we need to see demand rising and inventories getting depleted.  Today, we got the opposite.  According to two releases by the Census Bureau, retail sales fell in May, largely due to dropping demand in the auto market, while at the same time, inventories rose sharply.

First, the news on retail sales:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $387.1 billion, a decrease of 0.2 percent (±0.5%)*from the previous month, but 7.7 percent (±0.7%) above May 2010.  Total sales for the March through May 2011 period were up 7.5 percent (±0.5%) from the same period a year ago.  The March to April 2011 percent change was revised from +0.5 percent (±0.5%)* to +0.3 percent (±0.3%)*.

Retail trade sales were down 0.3 percent (±0.5%)* from April 2011, but 8.0 percent (±0.7%) above last year.  Gasoline stations sales were up 22.3 percent (±1.7%) from May 2010 and nonstore retailers sales were up 15.9 percent (±3.1%) from last year.

At first, news outlets tried putting a positive spin on this news, mainly because the figures exceeded expectations of a larger decline.  By mid-morning, though, Reuters acknowledged that it provides yet another sign of an economic slowdown:

Retail sales fell in May for the first time in 11 months as receipts at auto dealers dropped sharply and other spending softened, suggesting economic activity continues to slow.

Retail sales slipped 0.2 percent, the Commerce Department said on Tuesday, after a 0.3 percent rise in April. Economists had expected retail sales to fall 0.4 percent. …

“The U.S. retail sales data … will not change the impression of some meaningful slowing in underlying consumer spending in Q2,” said Alan Ruskin of Deutsche Bank Securities.

Thanks in part to slowing demand, inventories rose 0.8% in April, and have increased by almost 11% over the last year:

April 2011 business inventories were $1,497.5 billion, up 0.8% from March and up 10.6% from April 2010.

Business sales had their “weakest advance” in almost a year, according to CNBC:

Business sales edged up 0.1 percent, the weakest advance since June 2010, after rising 2.4 percent the prior month. April’s weak sales pace raised the inventory-to-sales-ratio — which measures how long it would take to clear shelves at the current sales pace — to 1.26 months from 1.25 months in March.

Increases in wholesale prices have started to wane a bit, perhaps a measure of the plateauing of fuel prices, but also perhaps because of expanding inventories:

Wholesale prices rose at the slowest pace in 10 months in May as food costs fell and gas prices rose by the smallest amount in eight months. The figures suggest consumers could see some relief from rising prices soon.

The Producer Price Index, which measures price changes before they reach the consumer, increased 0.2 percent in May, the Labor Department said Tuesday. That’s down sharply from a 0.8 percent rise in April and a 0.7 percent increase in March.

In the past 12 months, the index has risen 7.3 percent, the most since September 2008.

We’re looking at a bad Q2 thus far, worse than the 1.8% we saw in Q1 — and that was mostly inventory expansion.  Real final sales of domestic product increased only 0.6% in Q1, and that seems to have fallen even further off in the first two months of Q2.  These numbers today mostly beat expectations, as Suitably Flip notes, but only because expectations have fallen so low.  With sales dropping and inventories rising again, expect goods orders to continue their decline and the manufacturing sector to stop producing jobs again.

Welcome to Wreckovery Summer II!

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In other news, the Down Jones LOVES news like this and is up by 120 points because of *shakes 8-ball* the retail sales drop isn’t as bad as they expected!

There are so many things wrong with American capitalism, or at least its practitioners.

Apologetic California on June 14, 2011 at 11:29 AM

Again?

steebo77 on June 14, 2011 at 11:29 AM

Guess I can say goodbye to my house for sure now.

Lanceman on June 14, 2011 at 11:30 AM

Just another bump in the road to the total destruction of the economy.

txdoc on June 14, 2011 at 11:30 AM

Economists had expected…

Here’s their new way to write “unexpected.” We expected X and got Y instead.

jwolf on June 14, 2011 at 11:30 AM

Shoppers are racist!!!

angryed on June 14, 2011 at 11:32 AM

In other news, the Down Jones LOVES news like this and is up by 120 points because of *shakes 8-ball* the retail sales drop isn’t as bad as they expected!

There are so many things wrong with American capitalism, or at least its practitioners.

Apologetic California on June 14, 2011 at 11:29 AM

The Dow Jones is an index. It doesn’t love anything. Traders love news like this because piss poor economic news equals lower interest rates. Lower interest rates = higher stock values. This is for 2 reasons….lower rates means less cost to borrow whcih means higher profits, if bonds are offering lower yields there is more incentive to buy stocks.

No conspiracy here.

angryed on June 14, 2011 at 11:34 AM

not good….with inflation kicking in….those inventories are worth less and less.

Double-Dip with stagflation please….hold the cherry on top.

Tim_CA on June 14, 2011 at 11:35 AM

It’s not all negative. The oceans continue to recede and the planet is healing. You can take that to the bank and cash it like a paycheck, right?

trubble on June 14, 2011 at 11:35 AM

Shoppers are racist!!!

angryed on June 14, 2011 at 11:32 AM

Democrats have a plan to “mandate” what we buy, how much we buy, and where we buy it.

If only they can destroy Palin…

Roy Rogers on June 14, 2011 at 11:35 AM

With sales dropping and inventories rising again, expect goods orders to continue their decline and the manufacturing sector to stop producing jobs again.

man, with all of these bumps, we’re going to need a Jeep Wrangler to negotiate this terrain…..oh wait!

ted c on June 14, 2011 at 11:38 AM

Wait until you have to 20% back down on a home. Areas like CA, NY, and FL will have major decreases in prices. However, this decrease is needed since it will bring us back to normal supply/demand market rules. Not government inflated demand.

Oil Can on June 14, 2011 at 11:38 AM

it takes a while to totally tank an economy, a country and nation….

BE PATIENT!!!!!

SDarchitect on June 14, 2011 at 11:40 AM

There is an easy remedy to shrinking auto sales: Outlaw all petroleum powered vehicles and force an electric car mandate similar to ObamaCare.

Surely even you simple-minded wing-ding-dongs can understand this.

Bishop on June 14, 2011 at 11:42 AM

Well, that was unexpected.

/

Bob's Kid on June 14, 2011 at 11:42 AM

It’s not all negative. The oceans continue to recede and the planet is healing. You can take that to the bank and cash it like a paycheck, right?

trubble on June 14, 2011 at 11:35 AM

A+

Tim_CA on June 14, 2011 at 11:42 AM

Just another bump in the road against all them headwinds.

pilamaye on June 14, 2011 at 11:43 AM

Sucks to live in a Democrat State.

Explains why people are moving to red states.

Roy Rogers on June 14, 2011 at 11:44 AM

But the Dow is up!

/Maddow

Key West Reader on June 14, 2011 at 11:44 AM

So, when do we start calling it Depression Date?

upinak on June 14, 2011 at 11:44 AM

Not to worry. Baracky is on the case. He understands and knows why so many people are unemployed and have no money to buy anything.

From Weaseal Zippers: Obama Blames ATM Machines For High Unemployment Rates . . . Wait, Did He Say ATM Machines?

GrannyDee on June 14, 2011 at 11:45 AM

Green shoots. We just have to be patient.

a capella on June 14, 2011 at 11:46 AM

“Rising inventories? What about my rising golf score if I waste my time here talking to reporters about unimportant matters.?”

MaiDee on June 14, 2011 at 11:46 AM

It is your patriotic duty to spend more than you have and go deeply into debt!

Dr. ZhivBlago on June 14, 2011 at 11:47 AM

Not to worry. Baracky is on the case. He understands and knows why so many people are unemployed and have no money to buy anything.

From Weaseal Zippers: Obama Blames ATM Machines For High Unemployment Rates . . . Wait, Did He Say ATM Machines?

GrannyDee on June 14, 2011 at 11:45 AM

Blame Bush ATM

Obama must have upped his anti-depressents

Roy Rogers on June 14, 2011 at 11:48 AM

Uggg!

I want good headlines!

At least this is bad for Obama. Seriously, it is sometimes hard not to root for bad economic news, because I want Obama gone so bad, but I am really really really tired of the bad economy. And the uncertainty of it all.

petunia on June 14, 2011 at 11:49 AM

” largely due to dropping demand in the auto market, while at the same time, inventories rose sharply.”

This means there are plenty of electric cars available,right?

docflash on June 14, 2011 at 11:49 AM

“I suppose the recovery summer wasn’t as recoverable as I thought. HAHAHAHAHAHAHAHAHAHAHA! I crack myself up!”

-PBHO

Bishop on June 14, 2011 at 11:51 AM

All this bad economic news was unexpected.

Mojave Mark on June 14, 2011 at 11:51 AM

Not to worry. Baracky is on the case. He understands and knows why so many people are unemployed and have no money to buy anything.

From Weaseal Zippers: Obama Blames ATM Machines For High Unemployment Rates . . . Wait, Did He Say ATM Machines?

GrannyDee on June 14, 2011 at 11:45 AM

Huh? Ok, let me follow this logic. He says that technology is making workers obsolete or expendable. Alright, fair enough. ATMs render bank tellers useless. But what about the person you need to hire to install the ATM machine? And to repair the ATM machine? And to restock the machine with cash? And to monitor the security footage being recorded by it? For every door that’s shut by a technological advance, half a dozen new ones are opened.

Doughboy on June 14, 2011 at 11:54 AM

And according to FLOTUS (from her speechifying on Monday) we’re definitely in good hands with her husband, because “He reads every word, every memo, so he is better prepared than the people briefing him,” she said. “This man doesn’t take a day off.”

GrannyDee on June 14, 2011 at 11:54 AM

Obama/Biden………Double Dip

cartooner on June 14, 2011 at 11:54 AM

Paging Reverend Wright.
Paging Reverend Wright.

You’re wanted on the pink(o) phone.

You’re tired-ass phony ideal of social justice is coming home to roost. We’re all going to be poorer than church mice. Happy now, hater? Cock-a-doodle-doo!

Retail sales drop, inventories rise in May
posted at 11:25 am on June 14, 2011 by Ed Morrissey

So thus begins the descent into the maelstrom; we can’t prevent it any longer. We can only hope to stanch the bleeding that is sure to come with the liberals’ agenda getting closer and closer to being realized.

If we don’t get sane policy in place soon, we will find out what exactly is the depth of the abyss whether or not we care to know.

Strap in, folks.

It’s going to make a roller-coaster look like skateboarding the humps at your local Putt-Putt franchise.

LIBERALS, you’d better get your talking points ingrained in your weak little minds. You’re gonna need them and much much more.

hillbillyjim on June 14, 2011 at 11:55 AM

The President could spend every minute undoing his own agenda (which he’ll never do) and the economy probably wouldn’t gain enough momentum to be anything but miserable before election day.

Speakup on June 14, 2011 at 11:56 AM

Huh? Ok, let me follow this logic. He says that technology is making workers obsolete or expendable. Alright, fair enough. ATMs render bank tellers useless. But what about the person you need to hire to install the ATM machine? And to repair the ATM machine? And to restock the machine with cash? And to monitor the security footage being recorded by it? For every door that’s shut by a technological advance, half a dozen new ones are opened.

Doughboy on June 14, 2011 at 11:54 AM

Same points that occurred to me, Doughboy.

Logical thinking is not in Ogabe’s dictionary.

GrannyDee on June 14, 2011 at 11:57 AM

GrannyDee on June 14, 2011 at 11:45 AM

Yeah, this whole industrial revolution thing has been a disaster.

If only we could go back to the days when getting a pair of shoes from the cobbler meant you first had to handmake a few baskets or forge an axe head to trade for the shoes.

Bishop on June 14, 2011 at 12:02 PM

Oh, I almost forgot.

G.D. America!

You idiots in the 52% take a good look at what you’ve done.

I hope you’ve sense enough to clean up your mess.

hillbillyjim on June 14, 2011 at 12:02 PM

With inventories increasing there is less liklihood of moving expensively acquired inventories, therefore the angst of holding it when property taxes come due. This varies as to one’s fiscal year, but pretty much lines up with annual valuation. There is a mixed bag of potential cost increases/decreases on the horizon. But overall, without incentive to place replenishment orders, manufacturing goes down, materials to manufacture items sits longer, and the cycle becomes self-sustainably stagnant or worse.

Great job BarryO, Sheriff Joe, HReid, and TurboTax Timmy. You’ve at least met everyone’s expectations.

Robert17 on June 14, 2011 at 12:03 PM

Wait until you have to 20% back down on a home. Areas like CA, NY, and FL will have major decreases in prices. However, this decrease is needed since it will bring us back to normal supply/demand market rules. Not government inflated demand.

Oil Can on June 14, 2011 at 11:38 AM

What’s wrong with 20% down? The bubble happened because people were buying $1M houses with $0 down. I think 20% is too low. Should be 30%. But I’ll take 20%.

angryed on June 14, 2011 at 12:03 PM

If only we could go back to the days when getting a pair of shoes from the cobbler meant you first had to handmake a few baskets or forge an axe head to trade for the shoes.

Bishop on June 14, 2011 at 12:02 PM

Don’t laugh. A few online sellers are considering barters

clnurnberg on June 14, 2011 at 12:04 PM

I no longer buy beef when I go grocery shopping, and I’m very hesitant to buy ground beef even though it’s sometimes less expensive than items such as steak.

I need new clothes, but in this economy, I have to hold out.

madmonkphotog on June 14, 2011 at 12:04 PM

But the Dow is up!

/Maddow

Key West Reader on June 14, 2011 at 11:44 AM

Remember how that was getalife’s mantra in January of ’09?

Del Dolemonte on June 14, 2011 at 12:07 PM

Obama has already explained that this is not his fault. Just be patient, recovery is already in progress.

Hening on June 14, 2011 at 12:09 PM

Obviously what we need is MORE economic regulation.

GarandFan on June 14, 2011 at 12:09 PM

Gas prices have gone through the roof with no sign of returning to normal*, which takes about an extra $50 to $100 out of a family’s pockets in a week, and then people don’t go out and spend as much money on new clothes, appliances, and kitchen remodels? You don’t say.

*Down $0.10 a gallon doesn’t count.

Roxeanne de Luca on June 14, 2011 at 12:09 PM

If only we could go back to the days when getting a pair of shoes from the cobbler meant you first had to handmake a few baskets or forge an axe head to trade for the shoes.

Bishop on June 14, 2011 at 12:02 PM

Don’t laugh. A few online sellers are considering barters

clnurnberg on June 14, 2011 at 12:04 PM

For their sakes, I hope they know it’s taxable income. Otherwise, the gubmint might just send a SWAT team to visit them.

GrannyDee on June 14, 2011 at 12:11 PM

Don’t laugh. A few online sellers are considering barters
clnurnberg on June 14, 2011 at 12:04 PM

I don’t mind bartering, I’ve been practicing that for ages now, it’s the hand-producing of things which PBHO seems intent on reintroducing to our economy.

Bishop on June 14, 2011 at 12:16 PM

…it’s the hand-producing of things which PBHO seems intent on reintroducing to our economy.

Bishop on June 14, 2011 at 12:16 PM

Tony Weiner can do the hand jibe…

Roy Rogers on June 14, 2011 at 12:21 PM

“He reads every word, every memo, so he is better prepared than the people briefing him,”
-
Yeah… I believe that/s… Some days… if I try to read every memo that passes my mail box… my real work would never get done(as oppesed to skim or better yet talk to the sender face to face and have my questions answered w/out email-reply-copy all-reply all…)
-
And they call it a briefing for a reason… Just the important points… You won’t go into or even out of one of those knowing more than the briefer… except on a rare occasion… i.e. in Barry’s case if the Alinsky Rules is the topic… Then he already read the whole damn book and could recite chapter and verse…
-
But I did enjoy this one…
You’re an Idiot

RalphyBoy on June 14, 2011 at 12:23 PM

Real final sales of domestic product increased only 0.6% in Q1

Ed, you know this “actual” (LOL!) GDP number will be adjusted at least twice, and it won’t be adjusted upward.

The previous GDP numbers were also political statistics and all of them were in reality much much lower then even their “final” “adjusted” values.

dogsoldier on June 14, 2011 at 12:25 PM

RalphyBoy on June 14, 2011 at 12:23 PM

Seems like it would be more than half.

Perhaps Obama cancelled the economic briefings because he’s just not that into recovery.

Roy Rogers on June 14, 2011 at 12:28 PM

What’s wrong with 20% down? The bubble happened because people were buying $1M houses with $0 down. I think 20% is too low. Should be 30%. But I’ll take 20%.

angryed on June 14, 2011 at 12:03 PM

I like 20% down, Texas has a 20% law and Real Estate Industry is doing better. What I’m saying just wait for the impact when 20% down rules return to these bubble areas.

20% down or 10% down with PMI. Nothing less than 10%

Oil Can on June 14, 2011 at 12:32 PM

Seems like it would be more than half.

Perhaps Obama cancelled the economic briefings because he’s just not that into recovery.

Roy Rogers on June 14, 2011 at 12:28 PM

-
I thought that too… But with so many out of work for so long… stamps might be off the family budget.
-
Read what Mrs. Bozo said about him knowing more than the briefers… Hence… cancel the economic briefs and memos… Barry already knows it all… His plan is on track to crush all hope of ever recovering.
-

RalphyBoy on June 14, 2011 at 12:37 PM

It’s only that we all read Friedman’s article and are working less, and buying less useless stuff, oh, and going to more ball games (right, at $100 a ticket). After all we have to keep pro athletes rich first and foremost. They have to put food on the table too.

RonD504 on June 14, 2011 at 12:40 PM

I’m still asking: If the value of our housing is going down, why aren’t the taxes based on those values going down?

Colbyjack on June 14, 2011 at 12:44 PM

But the Dow is up!

/Maddow

Key West Reader on June 14, 2011 at 11:44

AM

Remember how that was getalife’s mantra in January of ’09?

Del Dolemonte on June 14, 2011 at 12:07 PM

Yeah, and “employment is a lagging indicator” was pretty popular in ’09 and ’10. It’s now a really really lagging indicator, I guess.

forest on June 14, 2011 at 12:45 PM

Techonology is not always what it appears to be. In my experience, tellers restocked the ATM with money, deposit slips and envelopes and processed the deposits retrieved from the ATM. Everytime we opened an ATM, it was under dual control, requiring two tellers to be present, for security purposes. ATMs and airport kiosks have been around in robust economies too. Obama blames everything and everyone else for his failed policies.

We’ve driven past Goodwill on their 50% off Saturdays. You can’t park close to the store, the lot and store are jammed with shoppers. Meanwhile, the mall stores are nearly empty.

GrannySunni on June 14, 2011 at 1:13 PM

What’s wrong with 20% down? The bubble happened because people were buying $1M houses with $0 down. I think 20% is too low. Should be 30%. But I’ll take 20%.

angryed on June 14, 2011 at 12:03 PM

No, the bubble occurred because people were getting loans based on unrealistic appraisals, and people who should never have been approved were being approved thanks to Frank, Dodd, and their pals at Fannie and Freddie.

We had had low down payment loans for years with minimal problems. The problems began with the Community Reinvestment Act of 1998 and went swiftly downhill as Bush bought onto the “home ownership makes better citizens” mantra of Frank, Dodd, & Company (not realizing they had the formula backwards).

The moral of the story is: Don’t lend money to people who can’t pay it back or, by their history, just won’t.

Adjoran on June 14, 2011 at 1:45 PM

There’s a certain logic and consistency to Obama’s economic theory about ATMs and unemployment.

1) Businesses are becoming more efficient
2) Efficiency causes unemployment
3) Government is inefficient

Therefore:
4) Reduce unemployment by having government take over businesses.

PackerBronco on June 14, 2011 at 2:10 PM

Barry reads every memo…
-
Mr. President. Tee times are confirmed for 9:00 AM all week.
-
Barry, you’re an idiot. Luv Momo…
-
Daddy, did you stop the warming yet? And OMG… Bo pooped on the floor again. Bo Biden that is…lol… Miss you Natasha.
-
Wat up brother? BA… call me. we’ll do something
-
Barrack, you been slacking on attending church. Your front and center seat is always empty and waiting your return. I understand, but I do miss you… like I would miss my own son.
Yours… Rev Wright
-

RalphyBoy on June 14, 2011 at 2:10 PM

Obama’s policy chickens coming home to roost.

TN Mom on June 14, 2011 at 2:13 PM

Not to worry. Baracky is on the case. He understands and knows why so many people are unemployed and have no money to buy anything.

From Weaseal Zippers: Obama Blames ATM Machines For High Unemployment Rates . . . Wait, Did He Say ATM Machines?

GrannyDee on June 14, 2011 at 11:45 AM

OMG! At first I thought that was another of Obama’s shovel-ready jokes.

Crikey

TN Mom on June 14, 2011 at 2:17 PM

We’ve driven past Goodwill on their 50% off Saturdays. You can’t park close to the store, the lot and store are jammed with shoppers. Meanwhile, the mall stores are nearly empty.

GrannySunni on June 14, 2011 at 1:13 PM

You know things are bad when folks can’t even afford to shop at Wal-Mart.

http://independentretailer.com/2011/06/06/350-walmart-express-stores-to-solve-falling-sales/

Dr. ZhivBlago on June 14, 2011 at 2:51 PM

What’s wrong with 20% down? The bubble happened because people were buying $1M houses with $0 down. I think 20% is too low. Should be 30%. But I’ll take 20%.

angryed on June 14, 2011 at 12:03 PM

No, the bubble occurred because people were getting loans based on unrealistic appraisals, and people who should never have been approved were being approved thanks to Frank, Dodd, and their pals at Fannie and Freddie.

We had had low down payment loans for years with minimal problems. The problems began with the Community Reinvestment Act of 1998 and went swiftly downhill as Bush bought onto the “home ownership makes better citizens” mantra of Frank, Dodd, & Company (not realizing they had the formula backwards).

The moral of the story is: Don’t lend money to people who can’t pay it back or, by their history, just won’t.

Adjoran on June 14, 2011 at 1:45 PM

Best source of information on the financial meltdown is the book referenced in this article: Fanniegate: Gamechanger For The GOP?

Reckless Endangerment (by Gretchen Morgenson) gives the best available account of how the growing chaos in the mortgage and personal finance markets and the rampant bundling of dubious loans into exotically toxic securities plunged the world, and millions of American families, into the gravest financial crisis since World War Two.”

slickwillie2001 on June 14, 2011 at 2:54 PM

One of the first things you learn in managerial accounting is that in order to hide loses, you instead list that loss as a cost of goods sold, which has a corresponding asset account. Increasing inventories when a company should be usually means they are hiding losses, and not increasing their inventory.

SnKArcbound on June 14, 2011 at 3:11 PM

Joseph Trungale, the CEO of restaurant chain Marie Callender’s announced yesterday that the company has filed for chapter 11 bankruptcy protection.

The owner of the chain of eateries made the decision amidst falling sales due to the sluggish economy, as well as the struggling housing markets in both California and Florida.

The restaurant and bakery chain, famous for home-style meals and a bakery, and its sister company Perkin, both found themselves in dire straits after the 2004 housing market collapse.

Marie Callender’s plans on closing 64 of its 600 locations, the closure would result in the loss of 2,500 jobs. Prior to the announcement, the company employed nearly 12,000 people throughout its locations. Already 31 locations have been closed throughout the U.S, 13 of which were in California.

They closed the location here yesterday. No notice. A guy from corporate walked in and told them to shut it down.

We also lost the local Bible College up in Scotts Valley. Down the street from them, Seagate Technologies is consolidating it’s operations over to Cupertino. More jobs gone. They were interviewing some of the local cafes and whatnot. They don’t know how they’ll survive.

trigon on June 14, 2011 at 3:24 PM

On a brighter note, they’re delivering the first of my moving containers tomorrow. Once I have the house empty I can have the hardwood floors re-done and get the place on the market.

Bye bye California. Hello Texas!

trigon on June 14, 2011 at 3:28 PM

Obama/Biden………Double Dip(shits)

cartooner on June 14, 2011 at 11:54 AM

Fify, free

Schadenfreude on June 14, 2011 at 3:30 PM