How Can Retail Be Up And Sales Taxes Down? UPDATED

The King Report (courtesy the Big Picture) explains the conundrum: a new sampling technique makes year-to-year comparisons "futile", plus the report did not account for price changes aka discounts. After the type of severe downturn as last year, retailers go out of business, meaning the sample for the survey has to be changed. The Nov increase of 1.9% YoY is within the sampling error. The big news, however, is that the results did not account for discounts. The sales tax data may be giving us a better picture of retail this year than the surveys. An it has been down so far.

If the holiday sales this year are late as well as discount-driven, we might see a better sales tax report in Dec as shoppers wait wait wait for their sale price, then buy as the season ends; but overall this assessment puts a real damper on the Santa Rally.

UPDATE: story to hit tomorrow is Falling Rates Starting to Hit Electronics Retailers. BBY reported Nov sales were up, especially due to netbooks and smaller HDTVs, but warned that the next few months could disappoint due to severe discounting and buyers trading down to less expensive items. The CEA forecasts revenues to fall 6% in Q4 despite a unit increase of 6% - a huge swing because "deflationary pressure has accelerated." They cannot make it up in volume ... Santa (Rally) may stay home for Xmas.

Comments

[graspthemarket]

These two paragraphs are short in length but powerful in content.

Don't forget about the jobless claims being up last week--that is something that could come into play as we near the critical holiday spending week.

I wrote on one of my daily updates last week addressing the jobless claims oversight by the media. I mention this paragraph because, like you implied above, it seems like only certain "numbers" are getting looked at right now...for example, you mention "sampling error" That is an important fact. Here's what I wrote to support both of your ideas.

Something that was glossed over yesterday, or almost ignored completely, is that jobless claims unexpected jump of 17,000. That number seems important, but it was ignored. Let’s compare this to last Friday’s drop in unemployment. One week ago the “only” story was talked about was that unemployment dropped 0.2% to 10.0%. It seemed like every financial and news channel could not get enough of the number. It was almost as if nothing else in the world mattered. However, yesterday when jobless claims increased more than expected, the analysts tried to explain their way out of the number. According to Reuters, “The rise in claims was blamed on seasonal layoffs in industries such as construction and a rebound in applications that had been held back during the Thanksgiving holiday week.” Excuses don’t belong in business. They belong in the sixth grade when you forget to do your homework. Why weren’t there any excuses to unemployment dropping; there were only good, solid “reasons.” Now, something negative surfaces and it is like, “Oh, well…ummm, Thanksgiving, seasonal layoffs, ummm…”

Thanks,
Jason

[Virginia Jim]

Interesting. And Trimtabs says employment dropped 255K in November when last week's BLS report said only 11K. Many years ago I had to fill out two months of that blasted survey. Didn't know the payroll system or the format and meaning of the report. And hated it. Fortunately, I was able to get a TEMP to do it thereafter. I'm sure it was done well thereafter (not).

Given that so few of the BLS surveys are filed and so many of those filed are filed timely by less than expert or diligent employees, why would anyone find the BLS statistics more than occasionally accurate if then. In contrast, Trimtabs actual tax deposits. Can't fudge cash.

I expect the mess will hit the fan soon enough.

Jim