Here's the headline ...
(snip)"July 7 (Bloomberg) -- U.S. retailers’ sales are growing at the fastest pace in four years, a sign consumers may be overcoming concern about unemployment and depressed home values.
Sales probably expanded at an average monthly rate of 4 percent in the first five months of the retail fiscal year that began Jan. 31, the biggest gain since 2006, the International Council of Shopping Centers trade group said in advance of its June report tomorrow."(snip)
but here's the true 'under the hood' economics ...
(snip)"Everyone is looking for signs of a continued recovery. Unfortunately there are many misleading signs that trap all but those willing to look beneath the surface to see what is really happening.
For example, please consider the Bloomberg headline U.S. Retailers’ Sales Rise at Fastest Pace in 4 Years"(snip)
(snip)"All of these pundits are barking about same store sales, an extremely misleading sign given retail stores are closing like mad.
Month in and month out we hear the same nonsense about retail sales. I will believe it when I see state sales tax collections support the claims.
Strip Mall Vacancy Hits 10.9 Percent, Approaches 1991 Peak
Amidst all the fanfare of purportedly rising retail sales, those digging a little deeper note US shopping center vacancy rates rose in 2nd quarter.
Retailers shuttered more stores in U.S. shopping centers during the second quarter, further delaying a rebound in the struggling retail real estate market, according to research firm Reis Inc.
Shopping centers and strip malls have been pounded harder than other types of real estate, hurt by weak consumer spending, anemic job growth and an oversupply built to serve new housing that never materialized.
"Until we see stabilization and recovery take root in both consumer spending and business spending and employment, we do not foresee a recovery in the retail sector until late 2012 at the earliest," said Victor Calanog, Reis director of research."(snip)
(snip)"Same Store Sales - Misleading Sign
Reis has it correct and so do I. Not only is it easy to beat record low comparisons of a year ago, same store sales are rising in part because stores are closing like mad.
Circuit City closed its entire chain in bankruptcy, thus some of those sales went to Best Buy, some other places, and some sales simply vanished.
More importantly, states have been reporting declining sales tax collections for the entire year.
Admittedly state tax collection numbers are frequently delayed by a couple months, but that still does not jibe with overly bullish comments about sales over the first five months of the year from the International Council of Shopping Centers."(snip)
from
Put very bluntly, the purported increase in retail sales is based on dollars spent in 'same stores' that have been open for more than a year versus sales levels of months / years past. Unfortunately, this statistic does not take into account the fact that there are fewer stores remaining open today than there were in months / years past. Thus the reality of the situation may be that a chain of stores may have experienced a 20% overall decline in sales, but that the same chain has also closed down 30% of their branches, translating into a minor increase in 'same store' sales for the 70% of branches that still remain open for business despite an overall 20% decline in total sales dollars !!! Same principle applies to a particular chain of stores gaining sales when 100% of a competing chain's stores have totally disappeared due to bankruptcy ( i.e. Circuit City )
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