Well, we got new retail sales numbers from the Census Bureau. Calculated Risk reported an increase but, just like last month, these numbers are a little less bright when adjusted for population changes. Please take in mind this is a census year, and we’ll have a new population estimate soon, but if the gap between the 1990 and 2000 estimates is any indication, the difference shouldn’t that large. While we continue to see minor weakness in the population-adjusted sales, it’s starting to look like we are just moving sideways, which is not good news, but it’s better than bad news.

One of the items that I find discouraging is the percentage of sales volume that is gasoline sales. While sales numbers are moving roughly sideways, the amount of money spent on gasoline has been increasing. The increasing sales volume of an item with a low short-run elasticity of demand just means people’s income are increasingly tied up in covering the necessities and their disposable incomes are shrinking. That is not good news for the consumer. Where are all those gasoline savings Cash4Clunkers was supposed to bring us?

I also added a chart including per-employee retail sales, which show us some tremendous improvement in the retail sector. It looks like retail was able to adjust employee-levels quickly and the per-employee sales number is actually very close to the peak levels.

There have been many calls for a transaction tax. I oppose all of them. I am not a free-market fundamentalist, but intervention here will help nobody. I understand the desire to tax speculator’s trading activities, they can often be seen as value extracting instead of value creating activities, but at the end of the day, they do add liquidity and lead to tighter spreads, even if the liquidity is of low quality. The problem here is regulatory arbitrage, the transaction tax can easily be circumvented by moving transactions off-shore. I understand that is not trivial, but all the large  operations, the ones that can really affect the financial system, are big enough to be able to move the taxable operations because the cost of moving the operation will be less than the cost of paying the tax. Meanwhile, all the smaller players will be stuck paying the tax.

There is a lot of legitimate transactions that would end up burdened by the tax, from a small airline hedging fuel costs to a farming operation locking-in a price on a harvest, to a municipal water company hedging their energy costs (you’d be surprised at how much electricity those pumps need). The media has called it  a “Robin Hood” tax and the politicians are throwing numbers like “0.25 percent” around. They just don’t get it. First of all, this would mean bye-bye to the money market mutual fund industry and it’s associated returns for holders of cash. Secondly, it would wreak havoc in the Fx markets and inevitably lead small money-changers to go into the black market since the tax would be bigger than the current bid-ask spreads. Finally, the tax would just end up being paid by consumers in the form of higher prices. I won’t even touch the subject of market makers, whether official or de facto.

We need to fix problems, not symptoms! This is not progress.

1.) http://www.guardian.co.uk/business/2010/feb/09/tobin-tax-nighy-curtis-film
2.) http://www.bloomberg.com/apps/news?pid=20601103&sid=anYlPWIEm6gE
3.) http://www.lexology.com/library/detail.aspx?g=de4f41cb-2d89-410b-88ed-696853e482ec

Earlier today Calculated Risk posted about an improvement in total retail sales. I was interested in how these numbers would look once adjusted to their per-capita numbers. Obviously the population estimates (from the Census Bureau) might have a little bit of an error margin, but I wanted to see how the spending trends of Americans had, or had not, changed. In essence, I wanted to know if people were really spending more, or if the growth in total sales was just a by-product of population growth.

This doesn’t say much about the retail sector, because it isn’t adjusted to account for store openings and closings, in other words, as stores close and sales keep steady, revenue per store is increasing, but it does give us some clues as to whether there is upcoming expansion in the retail sector as the recovery takes hold. From what I gather from these graphs, I’d say an expansion in the number retail outlets is not something we should be expecting any time soon, which is bad news for REITs that operate shopping centers.

There is no adjustments for price levels, because of auto-correlation. Please feel free to submit questions, comments, or sector-specific requests.

I look forward to, in the future, making all my data sources available so they can be reviewed by anyone who may have any doubts about my methods. Just hold on a bit for that.

dS = ^δQ / _T

dS: change in entropy of an economic system
δQ: Let δQ be an element of the value given up by the body to any banker/financier during its own changes
T: An Absolute Return value