Global retail sales – looks bad, consumption very weak
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June 22nd, 2009 by Prieur du Plessis, Investment Postcards from Cape Town
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This post is a guest contribution by Rebecca Wilder*, author of the of the News N Economics blog.
Consumption spending is the “wild card” for the economic outlook in many developed economies (and developing, too, i.e., China). Massive wealth loss has increased saving around the world; and in countries like the US, I still see a very big question mark as to how discrete will be the shift in saving behavior. Or better yet, how far will the deleveraging process go? Will saving remain at its current 5.7% of disposable income? Go to 7%? Or 10%?
The answer is that nobody really knows. Nevertheless, the effects of increased saving and/or reduced consumption on economic growth to date have been devastating. In the US, consumption took -2.75% and -2.99% from overall growth in Q3 and Q4 2008, respectively (see the BEA’s contributions to GDP growth table).
The drag coming from consumption is global. Below are several regional illustrations of the average annual retail sales growth rate (per month) for 2008 and 2009 to date. Out of the 27 countries listed below, 18 posted a positive average annual growth rate in 2008, while just 5 saw the same in 2009 ytd. Note: I do not have access to “good” data for Latin America. I urge you to visit Vitoria Saddi’s blog, Latin America and Brazil - On Economics and Politics; she recently wrote a nice piece summing up the expansionary monetary policy across Latin America.
Note: For each graph below, the month listed in parenthesis next to the country name indicates the latest data point for retail sales. 2008 is the average annual growth rate spanning the months January to December. 2009 is the average annual growth rate January to date.
Retail Sales in Asia: Australia and China holding on
Retail Sales in Western Europe: Ireland and Greece give the rest of Europe some perspective
Retail Sales in Emerging Europe: Latvia suffers, and Poland just barely holding on. The RGE Monitor had a nice article about Latvia and Emerging Europe not too long ago.
Retail Sales in the US and Canada: US consumers dropped off the map; both countries are showing signs of stabilization (the “not falling as quickly” story).
Looks bad - no wonder the consumer outlook is key to many economic futures.
Source: Rebecca Wilder, News N Economics, June 21, 2009.
* Rebecca Wilder is an economist in the financial industry. She was previously an assistant professor and holds a doctorate in economics.
Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.
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Tags: Asia Australia, Bea, Canada, Consumption, Disposable Income, Economic Growth, Economic Outlook, Emerging Europe, Expansionary Monetary Policy, GDP, GDP Growth, January To December, Latin America, Massive Wealth, Q3, Q4, Question Mark, Retail Sales Growth, RGE Monitor, Western Europe, Wild CardPosted in Markets |
June 23rd, 2009 at 4:31 pm
I expect retail sales in the US to come off the bottom in Q4, as we come around to very favorable same-store sales comps, and the attendent press coverage turns more positive. That said, we’re likely to merely begin to resume retail growth from the new baseline levels, rather than rebound to prior sales levels. That kind of recovery will be much longer in the making.