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Retail Sales, Part II

Posted by: Michael Mandel on June 04

What is wrong with this picture?

real change
in retail trade
April08/april 07
U.S. 1.1%
Europe 15 -2.9%
Europe 27 -0.8%
U.S. -0.3%
Europe 15 -1.2%
Europe 27 -0.2%

How can it be that the U.S., pounded hard by the subprime crisis, has maintained stronger retail sales than Europe? If we believe these figures, real retail sales in the U.S. are up over a year earlier, while real retail sales in Europe are down substantially. Germany is down 5.6% over the past year, Spain is down 3.3%.

Even over the past four months, the U.S. has just had a mild decline in retail sales, while the Europe 15 has plunged (this grouping includes all the countries in the euro zone, which leave out Britain, which has been doing relatively well).

Something is odd here.

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Reader Comments


June 4, 2008 02:41 PM

Something's wrong with American stats but not European? That seems like a steep hill to climb.

In any case, fuel/food prices have been increasing in the U.S. (and not as much in Europe). Overall consumer inflation is .5% higher in the U.S. but consumer inflation minus energy and food is the same across the areas. This means retail prices are decreasing, relative to energy and food, in the U.S. This substitution effect can explain the data in your table.

Americans are buying more retail products as they substitute away from gas (and gas guzzling cars... see story today in the LAtimes re Hummers). You don't see this in Europe because gas prices haven't been increasing as much as in the U.S.

Keith G

June 5, 2008 07:21 AM

I can believe that there is a real difference between European and US sales. The European consumer, in my experience, is more cautious than the American consumer and reacts more severely to bad news.

However, I find it hard to believe that US real sales are up. This problem must go back to the previous blog. I know that my monthly expenses have increased by 3% over the past six months. My loss in home value does not reduce my expenses even though CPI calculations offset commodity increases with the reduced housing equivalent.

Does Europe deflate nominal sales differently than the US? How do they handle housing in their CPI?


June 6, 2008 11:29 AM

The problem is that every number they use is an 'adjusted' number. If they gave us the raw numbers, we'd be able to see the true picture.

Someone is telling us via CPI that inflation is only 2-3%. This is complete and utter tosh, as anyone who is paying a bill can readily attest. Energy, Food, Cable TV etc. are all up double digits. So what can be pulling the CPI down? Its being done deliberately. Publish the raw numbers, and let people figure out any reasonable adjustments and weighting factors themselves.

And yes, every country calculates things like GDP and inflation rates and unemployment rates differently. Thats why it looks like the US has far lower unemployment than say France or Italy, and you know this is not true. Again, if they'd publish the base components of data, we'd be able to normalize/standardize. Real data doesn't lie: manipulated statistics do.

Thank you for your interest. This blog is no longer active.



Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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