Don’t Ignore Business

Stocks are down 200 points this morning on soft retail sales. But real consumer spending is still going to come in around 2.5 percent at an annual rate in the 4th quarter.

On a calendar year average basis, retail sales rose 4.1 percent in 2007. That’s well below the 6 to 6.5 percent pace of the prior three years. It’s about the same as the 4.2 percent rate in 2003, but well above the 2.4 percent rate in 2002. On a Q4 over Q4 basis, 2007 retail sales came in at 4.9 percent, a wee bit less than the 5.1 percent in 2006.

However, everyone is ignoring a roaring business sales increase of 1.6 percent in November. This is a key recession indicator. And it is rising 13.8 percent annually over the 3 months to November, and 8.7 percent over the past year.

Meanwhile the inventory/sales ratio for business is rock bottom.