Flash Update
FLASH UPDATE
December 13, 2007
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November "Core" Retail Sales Gained 0.78% versus 1.22% Non-Core
Prior Food and Energy Inflation Revised Higher
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PLEASE NOTE: The SGS-Alternate CPI will be posted be later tomorrow (Friday) on the Alternate Data Series tab at www.shadowstats.com, following the release of November CPI data. A Flash update over the coming weekend will highlight this week's economic reporting, including the CPI. An Alert will follow on Monday, December 17th, or on the 18th, depending on timing of the data release for the U.S. government's 2007 GAAP-based financial statements. The December newsletter remains targeted for late next week. -- Best wishes to all, John Williams
Helped by the Census Bureau's inability to adjust adequately for seasonal variations due to an early Thanksgiving, some retail sales were drawn from December into November and were not adjusted. Also helping the monthly retail sales gain was surging inflation (including some upward revision to past history), the toll from which should be available more fully in tomorrow's CPI report. With that as background, the seasonally-adjusted November retail sales number was reported this morning as up by 1.22% (1.44% net of revisions) +/- 0.8%, after increasing by 0.23% (previously 0.16%) in October. Year-to-year growth was reported at 6.27% for November versus 4.98% (previously 5.15%) for October.
As discussed last month, if the Fed and Wall Street hypesters are going to tout "core" inflation, net of food and energy, at least they should be consistent and go to town over "core" retail sales, net of gasoline station and grocery store sales, which vary primarily based on those otherwise "meaningless" energy and food prices.
November's "core" retail sales rose by 0.78% (0.63% net of revisions), following October's 0.05% monthly increase (previously unchanged).
Of great interest, please note that the non-core gain of 1.22% was 1.44% net of revisions, while the core gain of 0.78% was 0.63% net of revisions. This means that the upward revision to retail sales was more than accounted for by upside revisions to gasoline and food prices. The CPI, however, does not get revised. So, will the November CPI pick up more inflation because of the prior revisions, or will the month-to-month data be the primary concern, irrespective of better information now available. I would bet on the latter circumstance.
There still appears to be an understatement of both food and energy inflation in play. While this morning's PPI report showed seasonally-adjusted monthly November PPI up by 3.2% against October's 0.1%, with some catch-up in energy prices, the food category showed no price increase for the month. As to tomorrow's release of the November CPI, again, any seasonally-adjusted monthly gain beyond 0.05% will add directly to October's annual inflation rate of 3.54%.
The slight widening in the October trade deficit and other recent reporting will be touched upon this weekend, as will the Fed's easing and the loan auctioning plan that is being coordinated with other central banks. The global bank solvency crisis appears to be deepening and spreading. My general outlook is not changed.
Further details also will follow in the December SGS newsletter.
The target date for the posting of the December SGS is for late next week. An e-mail advice will be made of its and intervening Flash Update/Alert postings.