AP's Rugaber, As Retail Sales Fall: Americans Are 'Reluctant to Open Their Wallets'

March 15th, 2016 3:22 PM

Today's report from the government on February's retail sales was awful. Last month's sales fell by 0.1 percent, which was bad enough. Beyond that, January's originally reported 0.2 percent increase was revised down to a 0.4 percent decrease. Additionally, as I noted at my home blog this morning, January's seasonally adjusted revision should have been much worse, based on how terrible that month's raw (i.e., not seasonally adjusted) sales figure was.

In his dispatch following the Census Bureau's release, the Associated Press's Christopher Rugaber recognized the fall in sales as a problem; but as he sees it, consumers have money, and just aren't spending it. The hardly subtle implication is that if the economy struggles, it will be due to our collective failure to engage in profligate spending.

The AP's headline and Rugaber's first paragraph are exercises in misdirection. If Americans had wanted to spend money on other items because gas prices were lower, they would have — but they didn't:


U.S. retail sales slipped last month, pulled down by sharply lower gas prices, and Americans spent much less in January than previously estimated. The figures suggest that consumers remain cautious about spending despite steady hiring.

Retail sales fell 0.1 percent in February, the Commerce Department said Tuesday. Excluding the volatile gas and auto categories, sales rose 0.3 percent. Overall sales were revised sharply lower in January, from a 0.2 percent gain to a drop of 0.4 percent.

Americans' reluctance to open their wallets could hold back growth in the first three months of this year. Economists had hoped that solid hiring and lower gas prices would entice consumers to spend more, yet Americans seem to be pocketing much of the savings from cheaper gas.

Here's a clue, Chris: Americans aren't opening their wallets because most of them know there's not a lot of money or spending power hiding inside. The remainder are very concerned about the economy's course after almost seven years of post-recession flatness and barely rising wages, and are trying to hold on to what they have.

Rugaber was also selective in his use of data, going back to January's report on personal income and outlays for positive news while ignoring weak payroll earnings news contained in February's jobs report:

Healthy consumer spending is a key component of growth this year. It is expected to offset drags from slower growth overseas and a strong dollar, which are cutting into exports and corporate profits.

As a result, economists and policy makers will be paying close attention to retail sales data and other measures of Americans' willingness to spend.

Other reports in the past few weeks have suggested that Americans are opening their wallets and pocketbooks. In January, total consumer spending rose by the most in eight months. Incomes rose by the most since June.

The problem is that weekly earnings of employees fell by $6.11 in February, the worst monthly drop ever in recordkeeping for that statistic — but somehow, the problem is our "willingness to spend."

Here's another consistently irritating aspect of AP's reporting on consumer spending, namely the fact that as the nation spends more for certain items while getting the same or worse "service," that is somehow framed as being positive:

Yet retail sales account for only about one-third of all spending, with services such as haircuts and Internet access making up the other two-thirds.

Americans are spending more on services such as health care, education and mobile data, so overall purchases may rise faster than the retail data suggests.

Rugaber's choice of items to include in "services" in the first paragraph hardly describes that category accurately. Housing and utilities and health care make up over half of all services. "Haircuts and Internet access" are very tiny elements.

The fact that "American are spending more," especially on health care and education, is hardly satisfying, given that costs continue to skyrocket while quality delivered has arguably deteriorated. Those who believe that the economy's growth, to the extent that it's even occurring, is largely artificial would seem to have a point once one considers how much of that "growth" has come from "health care" and "education."

Sunday evening, I noted how the Associated Press has reported on at least a half-dozen occasions that Wal-Mart's sales have "perked up" since last summer after putting a two-year plan in place to raise employee wages. Too bad it's objectively not true. I also noted that Wal-Mart's flat sales and future outlook contradict previously reported positive data on consumer spending, and that "something has to give."

Well, it did — and according to Chris Rugaber and AP, it's our fault.

Cross-posted at BizzyBlog.com.