It is interesting to look at the descending peaks as well... I wonder if this coincides with the rise of online retail. It is possible that this metric may have less predictive power as more retail sales move online and away from the brick and mortar
Amazing how many of those talking heads don't think a housing collapse will greatly affect the economy.
In fact, I heard David Lereah, Chief blabbermouth of the NAR, say that there won't be a serious downside to housing because we have a growing economy. He has it backwards. The growth in the economy in the last 5 years has been housing. A fall in housing will stall the economy.
KALEB, I agree we have to be careful about this measure - as we both noted, the retail model is changing with the internet.
edhopper, yes, I think the housing cheerleaders are underestimating the impact of the housing slowdown on the general economy. I think even some of the housing bears (UCLA Drs. Leamer and Thornberg) are overly optimistic.
I'll be interested to see if mortgage equity extraction dropped in Q2 2006 - I think it will trend downward all year impacting retail sales.
I was at one of the premier fashion malls in San Diego today, Fashion Valley, home to Neiman Marcus, Burberry, Saks, Lilly Pulitzer, Luis Vitton, Apple, Nordstroms, Guess, Williams Sonoma, Pottery Barn, Victorias Secret, and many more.
While the parking lot was packed, and the mall crowded, only 10% of shoppers carried a shopping bag. Most of the people were either window shopping, or came for the movie theater, or the chef presentation in the courtyard. In all my years of shopping at Fashion Valley mall, I have NEVER seen a demo in the courtyard.
Of the shoppers, 90% had Nordstrom Half-Yearly Sale bags.
Most of the parking lot was for the Cheesecake factory customers.
At Neiman Marcus, I was accosted by no less than 3 desperate salespeople in the aisle, begging me to sample some eyeliner of perfume. Usually just one lady does the eyeliner routine.
The retailers are showing desperation. I am a regular shopper who is looking for signs of a slowdown.
One more thing: whereas Help Wanted used to be in the Classifieds, now they are in the windows of so many stores. The Starbucks in Del Mar...in my grocery store shopping center, 4 Hiring signs: dry cleaner, pizza place, grocery store, and formerly was one at the cell phone store but they moved and now have a vacancy. Many more vacancies in Poway, CA, in retail centers. A 7,0000 sq ft vacancy at the busiest intersection in downtown Poway, totally unheard of.
always an abundance of jobs in the categories that couldn't pay for shelter let alone anything else. the retail surge was only possible due to cheap credit via the fed. i think they know they've gone too far, they're just trying to bring about an 'orderly' slowdown. sorry fed but the economy is a complex thing and you can't manipulate it like a clock. i expect another rate increase in august and then a pause with fingers crossed at the fed hoping the holiday season doesn't crash and burn.
powayseller,
My wife just did a bit of shopping at
Neiman Marcus in the Stanford Shopping Center and came home steamed. They are not tops on customer service. I don't think she is going back. Haven't visited or shopped at Stanford for a long while so don't have any thing to say about what is going on in retail there. But just wandering around the local area gives evidence of a good local retail economy. Time will tell. I hope for good news but expect bad.
powayseller: While I cannot comment much on the mall thing, the "help wanted" signs and store/establishment closures are seen in the SF Bay Area as well. And the not independent phenomenon of store relocations/renovations.
If you want to see another indicator, take a look at the retail employment trend at BLS. It's headed down. Usually this is a harbinger of recession.
Posted by: vorpal at June 4, 2006 10:41 AM
I calculate a monthly estimate of retail productivity -- real retail sales / retail hours worked). Retail productivity growth is at 5%, near the top of the recent range and much stronger then you saw at previous cyclical peaks.
With prices for department store type products falling at about
a 2.5% rate strong productivity is about the only way for retailers
to sustain profits growth.
So to a certain extent it is different this time in that retailers have unusually strong incentives to keep labor cost under control. But it does not negate your overall point.
Spin Spin and more Spin-
listen to CNBC- the worst of all- and some who make statements as 'regulars' on the various online business sites...
yup- everything is coming up roses.....
It is interesting to look at the descending peaks as well... I wonder if this coincides with the rise of online retail. It is possible that this metric may have less predictive power as more retail sales move online and away from the brick and mortar
Fed wants a recession. Fed will get a recession.
Amazing how many of those talking heads don't think a housing collapse will greatly affect the economy.
In fact, I heard David Lereah, Chief blabbermouth of the NAR, say that there won't be a serious downside to housing because we have a growing economy. He has it backwards. The growth in the economy in the last 5 years has been housing. A fall in housing will stall the economy.
KALEB, I agree we have to be careful about this measure - as we both noted, the retail model is changing with the internet.
edhopper, yes, I think the housing cheerleaders are underestimating the impact of the housing slowdown on the general economy. I think even some of the housing bears (UCLA Drs. Leamer and Thornberg) are overly optimistic.
I'll be interested to see if mortgage equity extraction dropped in Q2 2006 - I think it will trend downward all year impacting retail sales.
Best to all.
I was at one of the premier fashion malls in San Diego today, Fashion Valley, home to Neiman Marcus, Burberry, Saks, Lilly Pulitzer, Luis Vitton, Apple, Nordstroms, Guess, Williams Sonoma, Pottery Barn, Victorias Secret, and many more.
While the parking lot was packed, and the mall crowded, only 10% of shoppers carried a shopping bag. Most of the people were either window shopping, or came for the movie theater, or the chef presentation in the courtyard. In all my years of shopping at Fashion Valley mall, I have NEVER seen a demo in the courtyard.
Of the shoppers, 90% had Nordstrom Half-Yearly Sale bags.
Most of the parking lot was for the Cheesecake factory customers.
At Neiman Marcus, I was accosted by no less than 3 desperate salespeople in the aisle, begging me to sample some eyeliner of perfume. Usually just one lady does the eyeliner routine.
The retailers are showing desperation. I am a regular shopper who is looking for signs of a slowdown.
One more thing: whereas Help Wanted used to be in the Classifieds, now they are in the windows of so many stores. The Starbucks in Del Mar...in my grocery store shopping center, 4 Hiring signs: dry cleaner, pizza place, grocery store, and formerly was one at the cell phone store but they moved and now have a vacancy. Many more vacancies in Poway, CA, in retail centers. A 7,0000 sq ft vacancy at the busiest intersection in downtown Poway, totally unheard of.
always an abundance of jobs in the categories that couldn't pay for shelter let alone anything else. the retail surge was only possible due to cheap credit via the fed. i think they know they've gone too far, they're just trying to bring about an 'orderly' slowdown. sorry fed but the economy is a complex thing and you can't manipulate it like a clock. i expect another rate increase in august and then a pause with fingers crossed at the fed hoping the holiday season doesn't crash and burn.
powayseller,
My wife just did a bit of shopping at
Neiman Marcus in the Stanford Shopping Center and came home steamed. They are not tops on customer service. I don't think she is going back. Haven't visited or shopped at Stanford for a long while so don't have any thing to say about what is going on in retail there. But just wandering around the local area gives evidence of a good local retail economy. Time will tell. I hope for good news but expect bad.
powayseller: While I cannot comment much on the mall thing, the "help wanted" signs and store/establishment closures are seen in the SF Bay Area as well. And the not independent phenomenon of store relocations/renovations.
I noticed this over a month ago and posted it on econbrowser on jun 4 2006
Econbrowser: Indications of slower growth
heres what I wrote:
If you want to see another indicator, take a look at the retail employment trend at BLS. It's headed down. Usually this is a harbinger of recession.
Posted by: vorpal at June 4, 2006 10:41 AM
I calculate a monthly estimate of retail productivity -- real retail sales / retail hours worked). Retail productivity growth is at 5%, near the top of the recent range and much stronger then you saw at previous cyclical peaks.
With prices for department store type products falling at about
a 2.5% rate strong productivity is about the only way for retailers
to sustain profits growth.
So to a certain extent it is different this time in that retailers have unusually strong incentives to keep labor cost under control. But it does not negate your overall point.