Ali’s blog

Mostly quant stuff with occasional digressions

Possibly misleading retail sales figures

Posted by alifinmath on February 19, 2008

In the Herald Tribune:

U.S. consumers are being forced to scale back their purchases, but high prices of necessities are keeping their overall purchases rising at a reasonably strong rate.

The retail sales report for January showing that overall retail sales were stronger than many had expected was well received by the stock market Wednesday, the day it was released. In total, retail sales are running more than 4 percent over the level of a year ago, an increase that is above the overall inflation rate and much stronger than when the last recession began in early 2001.

But the overall change is misleading. One reason for its strength is that prices of necessities are up sharply over the past year, meaning that those items consume more and more of the household budget.

Overall, Americans are spending about 13 percent more on food and energy now than a year ago.

The biggest cause of that increase is gasoline, of course, whose cost rose dramatically in 2007. Americans are spending 22 percent more now at gasoline stations than they did a year ago. Food costs are up nearly 6 percent – still a drain on budgets.

This resonates with me. Wage increases — where they’re forthcoming — are simply not keeping pace with general inflation (let alone bit-ticket items like education and healthcare).

In related vein, there was a poll question on CNN(!) a few days ago: Is the USA now a third-world country? Almost unanimously, people called in with a resounding “Yes it is.” On the downward trajectory of a state, most people experience declining standards of living. But maybe this is just my natural pessimism. Anyway, each time I go shopping, I don’t know where the money’s going. I feel poorer. Why, the Gillette razors that used to be $10 for a pack of ten a few years ago are now $15.95. I use the same blade for longer now. At this rate I’ll have to stop shaving pretty soon: I won’t be able to afford it.

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3 Responses to “Possibly misleading retail sales figures”

  1. Anonym said

    At least chocolate rations are up.

  2. Chris Prouty said

    Since you spent a semester in my class, you know that I shave only when forced to do so by social expectation. You are correct that Gilette razors are an egregious example of gouging. However, you and I have the luxury of choosing to be hairy. If you want to know how bad it can get, check out the price of tampons.

    By the way, even the suggestion that America is a third world nation is foolishness. Anyone who voted that the U.S.A. is a third world nation only exposed the fact that they’ve never spent any time in one.

  3. alifinmath said

    With regard to the first comment: the reference to “chocolate rations” comes from Orwell’s 1984, and the inspiration to refer to that may have come from Orwell mentioning the shortage of razor blades in Oceania and how the protagonist — Winston Smith — was hoarding one fresh blade. In Oceania, the chocolate rations are decreased to 20 grams a week but the propaganda is that they have been *increased* to 20 grams.

    With regard to the second comment. Yes, the USA isn’t third-world. But in terms of income and wealth disparity it probably deserves to be lumped with that part of the world (if we look at the Gini coefficient, for example).

    For anyone else reading this, Chris Prouty and I once had a learned discussion on the exorbitant price of blades (which partially explains why he remains hirsute). The truth of his charge that blades are outrageously priced sunk in with me when I saw the new price of the Gillette blades (I only have to buy them every so many months). I’ve tried cheaper blades but they leave my skin raw, and don’t last long anyway.I’m at my wits’ end.

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