Today's report from the government on retail sales was awful — "unexpectedly" so, according to both Bloomberg and Reuters. Following on the heels of a 0.4 percent seasonally adjusted decline in January and a flat February, March sales fell by 0.3 percent.
Two of the three main U.S. business wire services blamed the American people, not the worst post-recession economy since World War II during the Obama administration — an economy which is clearly weakening even further — for these results.
If we're to believe the business press, retail sales have been falling because Americans are "are reluctant to spend freely" (Associated Press), and are "holding back" (as seen in a graph at Bloomberg News). Meanwhile, Reuters erroneously contended that this weakness is occurring despite "a strengthening labor market" which "is starting to boost wages."
Here's Christopher Rugaber's "it's your fault" statement at AP, aka the Administration's Press (bolds are mine throughout this post):
Americans have been more cautious about spending this year than most economists expected, despite steady job gains and lower gas prices. That's a key reason why analysts now think the economy barely expanded in the first quarter.
By today's end some analysts should be estimating that the economy contracted in the first quarter. Last Friday, even before today's bad news, the Atlanta Federal Reserve and Moody's were estimating annualized first-quarter growth of just 0.1 percent. (Whether they will is another matter, given the climate of regulatory fear discussed later in this post.)
At Bloomberg, Sho Chandra's headline and the following quote from an "expert" essentially claimed that consumers aren't acting rationally:
Retail Sales Unexpectedly Fall as U.S. Consumers Scrimp
“We’re having a little bit of a soft patch here for the consumer, with no obvious rationale,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “It’s definitely a softer start to the year. Provided job gains remain as strong as they’ve been, we expect consumer spending should be OK.”
Bloomberg's Chandra also fixated on the news that 9 of 13 retail categories showed advances, as if that's supposed to make us feel better. If one looks at the categories which did decline, we should feel worse. Americans cut back on the kinds of things people avoid when they're seriously low on funds: shopping for new cars, clothing, visiting department stores, and going out to eat and drink.
The mystified Mr. Feroli at JPMorgan Chase only needs to open his eyes to find an "obvious rationale" for why consumers aren't spending. As shown in an April 4 NewsBusters post, jobs gains this quarter have not translated into more take-home pay, for two reasons. First, the average work week declined in February and was unchanged in March. Second, hourly pay declined in February and did not increase by enough in March to offset the impact of the shorter average work week. As a result, thanks to a sharp decline in average weekly pay in February and a March increase which only got about 40 percent of that decline back, American workers — even though their numbers increased — earned less total pay. Consumer spending will not "be OK" if these trends continue, Mr. Feroli.
At lease Reuters didn't call Americans a bunch of cheapskates, as AP and Bloomberg essentially did. An unbylined report posted at CNBC shortly after the retail report's release instead claimed that "Retail sales remain lackluster despite a strengthening labor market, which is starting to boost wages." A later Reuters report by Lucia Mutikani which also covered today's reported drop in producer prices repeated that contention. As noted above, the supposedly "strengthening labor market," which still has a dismal participation rate, is not boosting wages.
Instead of leaving the Obama administration's economic, tax and reglatory policies blameless, as the business press clearly has, a Wall Street Journal editorial last week succinctly explained why the economy's results have been so disappointing since the recession ended, and whey they're heading further south again.
The Journal's reaction was to yet another lawless move by the Obama administration relating to "tax inversions," but its larger points were about what the regime's consistent lawlessness has done to key decisionmakers affecting the U.S. economy:
Jack Lew’s Political Economy
Pfizer’s CEO nails the reason for slow growth and small wage gains.Pfizer CEO Ian Read (has a larger) point about capricious political power helps explain the economic malaise of the last seven years. “If the rules can be changed arbitrarily and applied retroactively, how can any U.S. company engage in the long-term investment planning necessary to compete,” Mr. Read writes. “The new ‘rules’ show that there are no set rules. Political dogma is the only rule.”
He’s right, as every CEO we know will admit privately. This politicization has spread across most of the economy during the Obama years, as regulators rewrite longstanding interpretations of longstanding laws in order to achieve the policy goals they can’t or won’t negotiate with Congress. Telecoms, consumer finance, for-profit education, carbon energy, auto lending, auto-fuel economy, truck emissions, home mortgages, health care and so much more.
Capital investment in this recovery has been disappointingly low, and one major reason is political intrusion into every corner of business decision-making. To adapt Mr. Read, the only rule is that the rules are whatever the Obama Administration wants them to be. The results have been slow growth, small wage gains, and a growing sense that there is no legal restraint on the political class.
As long as the Obama administration's mindset remains in place, it's unrealistic to expect a return to the kind of growth the U.S experienced previously, and it's hardly "unexpected" that consumers who mostly don't have much money to spend in the first place aren't spending it.
Cross-posted at BizzyBlog.com.
