Here is some news from the "no real news department". Consumer spending has hit a brick wall.
Even still, it is worth noting given the huge rally in the broader markets yesterday. Today, however is new one, and the market have gone red once again the most recent data.
It was pretty ugly.
From Bloomberg by Shobhana Chandra entitled: U.S. Retail Sales Drop in October by Most on Record
"Retail sales in the U.S. dropped in October by the most on record, pushing the economy toward the worst slump in decades.
The 2.8 percent decrease was the fourth consecutive drop and the biggest since records began in 1992, the Commerce Department said today in Washington. Purchases excluding automobiles also posted their worst performance.
Spending may continue to falter as mounting job losses, plunging stocks and falling home values leave household finances in tatters. Retailers from Best Buy Co. to Nordstrom Inc. are cutting revenue forecasts ahead of what may be the worst holiday shopping season in six years.
Retail sales were projected to fall 2.1 percent, according to the median estimate of 73 economists in a Bloomberg News survey. Forecasts ranged from a gain of 1.4 percent to a decline of 6 percent. Purchases in September were revised down to show a 1.3 percent decrease compared with an originally reported 1.2 percent drop.
Sales have now fallen for four months in a row, the first time that’s happened since records began in 1992. Excluding automobiles, purchases decreased 2.2 percent, almost twice as much as the 1.2 percent decline anticipated.
The International Council of Shopping Centers has forecast the November-December holiday season will be the worst since 2002.
Shoppers are pulling back as the labor market slumps. The unemployment rate jumped to 6.5 percent in October, the highest level since 1994. Employers cut more than a half million workers from payrolls in the past two months.
The longest expansion in consumer spending on record ended last quarter, causing the economy to shrink at a 0.3 percent annual pace.
The economic slump will intensify this quarter and persist into the first three months of 2009, making it the longest downturn since 1974-75, economists forecast in a Bloomberg survey conducted from Nov. 3 to Nov. 11.
“We are in the eye of the storm,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, who accurately projected the decline in sales. ‘The recession is clearly intensifying. The next few months will look pretty bad. The fourth quarter will be even weaker.’"
By the way, here is great chart on retail sales from the Calculated Risk Blog, a personal favorite. Talk about cliff-diving.
Keep in mind that consumer spending accounts for 72% of U.S. GDP.
Have a great weekend.
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