Retail Sales Show Growth…Or Do They?

by | Dec 11, 2009 | Headline News, Karl Denninger | 9 comments

Do you LOVE America?


    The Commerce Department is reporting that retail sales rose in November.

    Yahoo Finance: US Retail Sales Strong, Consumers More Confident:

    U.S. consumers stepped up their spending in November and grew more optimistic this month, data showed on Friday, raising hopes a self-sustaining economic recovery was starting to unfold.

    The Commerce Department said total retail sales increased 1.3 percent last month, the largest advance since August, after rising 1.1 percent in October. It was the second straight monthly gain and beat market expectations for a 0.7 percent gain.

    A separate report showed consumer sentiment improved in early December on signs of stabilization in the labor market.

    But are the retail sales numbers really what the Commerce Department says they are?

    Karl Denninger at Market Ticker has some doubts:

    On its face it looks like a good report.  However, the sampling change along with some of the missing internal sub-sets for the current month make it nearly impossible for me to evaluate whether we’re seeing broad-based strength on an actual basis or whether gasoline and sampling revisions are responsible for most of it.

    I’m deeply skeptical of these numbers, mostly because the other data available that I’ve cited in recent days – the Gallup Survey, the actual POS data stream analysis, and ShopperTrack’s latest – all say that Black Friday was down modestly (or worse.)

    Was the front of the month that much better on “hope and change” only to get blown to bits over the Thanksgiving Holiday?  I don’t buy it and thus far the preponderance of the evidence does not point toward a broad-based consumption recovery.

    Of notable interest is a report from the Associated Press which suggests that some well known retailers struggled in November:

    After posting two straight gains following more than a year of declines, big chain retail stores earlier this month reported a dip in November sales. Those figures didn’t include Wal-Mart Stores Inc., the world’s largest retailer, which no longer reports monthly sales.

    But a diverse group of stores, including Macy’s Inc., Saks Inc., Abercrombie & Fitch Co. and Target Corp., did post sharper-than-expected sales declines in November.

    We’ll get a better look at consumer spending and retail sales recovery in January, when we see the complete Holiday numbers from brick and mortar stores, as well as online shopping behemoths like

    It could go either way, but given the hit consumers have taken in the employment rolls, wage cuts and credit contraction, don’t expect a blow-out shopping season. If Gerald Celente is right, as he was last January, and we do have a Christmas Crash because of poor retail numbers, Get Ready for the Collapse to Come Very Quickly.


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      1. Isn’t it likely that people were just shopping for Christmas gifts, given all the deep retailer discounts in November, rather than do all the holiday purchasing in December? If consumer spending is up in January and February THEN it might indicate a growing economy. As is, isn’t this just holiday spending?

      2. Yeah, I am not sure what the numbers are year-over-year. January retailer numbers will be critical I think. Of course, if the last 6 months are any guide, retail sales may tank, and the Dow Jones will go to new highs.

      3. It will be interesting to see the January/February numbers. Maybe people are being employed in greater numbers. We can only hope that the economy will grow for a while to give people some relief.

        Since you mentioned the Dow Jones that makes me think of the stock market and how our 401(k) money is tied to it. We’ve seen how when the stock market goes down a person’s retirement savings can be destroyed. Does anybody know anyone who is retirement age and is drawing money out of their 401(k) plans? I’m 44 years old and I don’t know anyone who has actually saved and is know living off their 401(k) retirement savings.

        Seems that the whole scheme is just an untested running experiment. We’re just finding out how vulnerable our retirement savings are in being tied to the stock market.

        Personally, I think it was just another politically-motivated scheme to funnel more of people’s money into the stock market, read into Wall Street’s greedy hands.

        If the currency does collapse then won’t the stock market fall to new lows? Wouldn’t the mean that our 401(k) plans will take another beating?

        I’m barely contributing anything into the 401(k) anymore because I feel like it’s money down the drain.

        What do you guys think?

      4. Definately down the drain.

        I just had an experience today. Since I think the stock market is going to tank soon, I had planned to take enough money out to pay off my mortgage so I would be debt free. I had figured that if I paid out my loan, I would spend 50k of the next 15 years but I would only have to pay 40k in retirement funds even with taxes and penalties. …taxes and penalties that would be dwarfed by a major crash. Well, guess what? In the last two years they changed the rules. Now, you cannot withdraw your funds unless you’re 59.5 (I’m 47) or you are terminated from your employment. Guess when that was enacted? Mid 2007. Hmmm. Could it be that TPTB thought, “Hey! Lets lock these people in so they can’t get out, that way we can steal them blind and they can’t even leave so we can do it over and over.” Anyways, I can’t get any money out and I’m stuck here with this debt. By the time I get laid off the dow will have crashed and the money won’t be there. I’m going to put it in as conservative as I can but I’m sure they’ll figure out a way to steal that too.

      5. Net, I learned about this recently as well. Being anti-401k myself, I don’t have one, but my sister-in-law was talking about her’s and she couldn’t get any money out either. There was even one fund that was being held in her 401k that would not let her “sell” and move assets to another fund. It was some type of real estate fund she was in, but after the crash of 2008 they wouldn’t let anyone out.

        Is there any way to diversify what you have in the 401k? I mean, imagine a scenario like 1929 to, say, 1960… there was very little growth there in stock investments… say the market crashes.. Yeah, eventually it will go back up, but how old are you going to be before you even make your money back in REAL terms? You might have to wait 90 years just to break even!

        Is there a way to move into, say, a commodity fund? or perhaps a precious metals fund with a portion of the 401k?

        At least it’s not like Argentina yet, where they just seized everyone’s retirement funds and sent them on their way. Though, I wouldn’t put it past the govt some time in the future when they are really hurting for cash.

      6. Woah. This is a hot topic, the 401(k) that is.

        I agree with NetRanger. It’s money down the drain at this point, especially given the fact our accounts are denominated in a failing currency. It’s only a matter of time I believe for either of the following:

        1) another large market crash, taking 40-50% off the value of our collective 401(k)s
        2) a government nationalization (confiscation?) of our retirement funds, or at least a freezing of our accounts (perhaps used to “convert” all our allocations to 100% treasuries once the rest of the world pulls the plug on the dollar). No, the government probably won’t seize our gold as they did in 1933, but let’s face it – today’s wealth equivalent ripe for the taking is the 401(k) and related retirement savings.

        I made the decision last year to take out a loan. It was the only way I could get money out (had to prove hardship for a withdrawal which I couldn’t do). Learning this, I realized what a farce the system is. It’s your money, but you can’t get it when you want it. Plus, as NetRanger said, they can change the rules whenever they want. Who’s to say you’ll ever see a dime of your money?

        So I used my loan to buy PMs, solar equipment, food, water purification equipment, the whole 9 yards. Figured that investment was worthy infinitely more than any fiat system that could be instantly confiscated, devalued, or evaporated before my eyes.

        Incidentally, I have a few 401(k) funds, and I just took a loan out on one of them for the maximum. The other one I kept because it allows me to buy virtually any stock or index in the United States and Canadian stock exchanges. So check your plan. I have what’s called a self-managed account. I bought shares of CEF and major gold funds in that one.

        In addition to the loan, I have stopped all contributions to my 401(k), and used the savings to buy PMs and do whatever I want with. The system is fatally flawed and will be looked upon as one of the great swindles of our generation, in my opinion.

        Regarding the next market crash, my research shows a possible selloff in mid-February, practically 1 entire year from the low back in March.

      7. chris, I personally think the decision you made with the 401k was a solid move. I mean, why the hell not? If we are truly in a depression type of event, you will 1) lose money first 2) take 30 years to get back to “even” in real terms. You invested in tangible, hard goods, and in my opinion, that’s the place to be. PM’s should perform well and the food is something you can consume over time and swap out for experies further out as you go, so really, you have a rotating reserve supply for the rest of your life going forward if you wanted to always be prepped.

        I think your February sell-off forecast could be right on. Yes, we have talked about sell-offs and crashes here since early Summer, but there was really nothing to drive a sell-off. IMHO, January will be a bad month for retail sales, which means the global trade numbers will probably be very bad as well. This is ripe for a collapse.

        I will mention that all of the cyclical analysis based more or less on the MArtin Armstrong model are pointing at April/May — this includes cyclical modeling based on the MS models that are used by Weiss Research (Foundation for the Study of Cyclces) and HS Dent Investments. All of the models seem to be lining up for April or so… but plus/minus a couple months is close enough.

        Of course, like Faber has said, any weakness will lead to more printing. But, I have wondered how effective that would be, because if a crash happens, in my view, it will be so fast and so violent that it could literally knock the stock market down back near last year’s lows in a period of weeks.

        Either way — the only stocks I am going to be buying will be PM’s… I don’t trust anything else at this point. I wouldn’t mind another crash, because it will kill the major/junior miners as well, and that is going to be one hell of a long term investment, in my opinion.

      8. Mac, good points about the gold miners becoming the buy of a lifetime. Let’s hope history repeats itself in that respect.

        One thing I left out from before. I didn’t want anyone to read what I had done with my 401(k) and think it’s the best solution for them. What I left out is the risk I face should I lose my job  before my loan term is up. If that happens, I am required to pay penalties as the loan suddenly becomes considered a withdrawal (10% penalty for withdrawing before retirment age, plus applicable taxes because it’s considered “income”). The IRS will want their $$ regardless. This is a risk I took and everyone else must evaluate this based on their own tolerance for risk. Yet more proof how much they’ve got us by the balls.

      9. Chris, thanks for posting the risks of the 401k withdrawal.

        Ballzy move on your part — but IMHO, a good one. I woulda done the same except I am anti-401k and never had one.

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