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The Non-Rebound Rebound

Please consider US Stocks Stable After Retail Sales Rebound

U.S. retail sales rebounded in February, suggesting that the economy continued to grow in the first quarter, though at a moderate pace as tariffs on imports and mass firings of federal government workers weigh on sentiment.

This is not a rebound. The Census Department revised January from -0.9 percent to -1.2 percent.

And from that revision of -0.3 percentage points, sales only rose 0.2 percent vs the Bloomberg consensus estimate of 0.7 percent.

And even if we ignore the negative revision, real retail sales, adjusted for inflation were flat.

Advance Retail Sales

The Advance Retail Sales report for February shows further signs of consumer weakness.

Advance Estimates of U.S. Retail and Food Services Advance estimates of U.S. retail and food services sales for February 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $722.7 billion, up 0.2 percent (±0.5 percent) from the previous month, and up 3.1 percent (±0.5 percent) from February 2024.

The key phrase is in italics. These are nominal sales. It’s real (inflation-adjusted) sales that feed GDP.

Nominal Advance Retail Sales Month-Over-Month

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Nominal Month-Over-Month Details

• Total: +0.2 Percent
• Ex Motor Vehicles and Gas +0.5 Percent
• Ex Motor Vehicles: +0.3 Percent
• Food Stores +0.4 Percent
• Food Service: -1.5 Percent
• Nonstore: +2.4 Percent
• Motor Vehicles: -0.4 Percent
• Gas Stations: -1.0 Percent

To arrive at real sales, subtract 0.2 percentage points from the above numbers because the CPI rose 0.2 percent.

Real vs Nominal Advance Retail Sales Percent Change

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Real total retail sales were flat for the month. Factoring in negative revisions, real sales fell 0.3 percent.

Advance Retail Sales Millions of Dollars Seasonally Adjusted

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That chart is a mirage of inflation.

Real vs Nominal Advance Retail Sales

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Adjusted for inflation, retail sales are amusing.

Sales are below the free money pandemic spikes that fueled inflation ever since.

Real Retail Sales Detail Millions of Dollars

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Do these charts represent a strong consumer or strong inflation?

But hey, that’s OK because of the amazing success story of tariffs. For example, please consider The Amazing “Success” of Trump’s 2018 Aluminum Tariffs in One Picture

I hope you can take a bit of headline sarcasm because the true story follows.

Oh wait, I forgot that was sarcastic.

Trump and Secretary of Treasury Bessent Discuss the “Detox Recession”

On March 10, I noted Trump and Secretary of Treasury Bessent Discuss the “Detox Recession”

Don’t worry, it’s just a little more pain and inflation disturbance before tariff greatness begins.

Does that make you feel better?

Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget

On March 12, I commented Lutnick Says Tariffs Can Eliminate the IRS and Balance the Budget

Lutnick: “We’re going to make the External Revenue Service replace the Internal Revenue Service.”

I ran the math on that ludicrous idea. Team Trump only needs to bring in $7 trillion in tariffs on $3.3 trillion in total imports.

Then we need to faithfully collect 200 percent tariffs on everything with of no trade frictions, no retaliations, and full compliance.

Wait a second. Aren’t tariffs a tax on consumers. That’s what everyone with an ounce of common sense thinks.

However, Trump says they will make consumers strong again. Now, who are you going to believe?

Trump Wants a Weak Dollar But Needs a Strong One

On March 16, I commented Trump Wants a Weak Dollar But Needs a Strong One

Trump wants the Fed to cut interest rates to weaken the dollar and boost exports. But that’s not what helped him get elected.

Trumperland Miracles

Trump simultaneously promotes a strong and weak dollar, and proposes we collect huge tariffs while reducing imports.

We will allegedly balance the budget by running huge deficits while having a Detox recession and not having recession.

Finally, in Trumperland, contradictions have no meaning, so a dollar that buys less results in lower inflation.

Got it?

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