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Women’s Dress Sales Suggest Recession: Schoenberger

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Since consumer spending is said to account for some 70% of GDP, it's not unusual for analysts to lean on shopping data to gauge the U.S. economy. Todd Schoenberger of the BlackBayGroup.com reduces that strategy even further by using expenditures on just one product as his tell. That product? Women's dress sales.

"Go back to 1980; anytime the month over month number (in women's dresses) actually declines it has served as a proxy that there is a slowdown that heads into a recession for the U.S. economy," Schoenberger asserts with jaunty confidence in the attached video.

Why women's dresses? "The logic is this: the woman of the household tends to be be the accountant of the household. She's going to take care of little Johnny, maybe get a class picture outfit from Gymboree and then spend the money on herself... if you're not seeing women buying stuff for themselves you know the husband isn't going to do anything. Therefore you're probably seeing retailing stocks going down."

The problem with the theory, other than certain cave-dwelling aspects of it, is that we haven't seen retailing stocks go down much at all. Family Dollar (FDO), Dollar General (DG) and Dollar Tree (DLTR) are outperforming the broader market by a mile. The Consumer Discretionary ETF (XLY) is up more than 10% for the year, within 5% of 2012 highs.

The former names are strong as a function of consumers stepping down to the lower end and the discretionary readings are living on borrowed time, Schoenberger says. The weak price action of stocks like Ann Taylor (ANN) and Nordstrom (JWN), two well run companies recently under attack, show Schoenberger that his archetypical mom has stopped buying for herself. A chilling portent of doom for the U.S. economy as a whole.

What do you think? Is the U.S. headed for a recession because JWN had a bad quarter or is Schoenberger stuck somewhere between 1950 and 1975? Let us know in the comment section below or Tweet me @Jeffmacke

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