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Retail Sales Data Show a Recovery Stuck at Stall Speed


The Commerce Department released retail sales for February this morning that were much stronger than anticipated. At least on the headlines. Total sales were up 1.1% overall and .4% ex-good and autos, well ahead of estimates of .5% and and .2% respectively. The strong numbers came despite a more than 10% rise in the average price for a gallon of gas during the same period.

So we're in the clear, right? Not so fast says Dan Alpert the founder and Managing Partner of Westwood Capital. "The things you'd expect the well-to-do to spend on which is housing and automobiles have all gone up dramatically" says Westwood.

Strip away those gains and look at areas where the less affluent would be expected to purchase at a disproportionate rate and the picture gets gloomier. As Westwood reads the data, anything that economists would have expected to be hit by the payroll tax cut declined.

Food services and bars dropped .7% compared to January. Home furnishing dropped 1.6% and electronics appliances were off .2%. Not catastrophic drops but nothing to sneeze at coming as they did during the first month the payroll tax cut really hit consumers hard.

Putting the pieces together with the better than expected Non-Farm Payrolls data and you see an economy that's got jobs growing on the low end, largely as a function of higher end consumers creating demand. Until the whole picture gets working in synch with jobs expanding across the board and retail sales advancing in a more uniform way, it will be difficult to make a reasonable case that the ecnonomic recovery includes anything more than low-end government jobs being replaced by the same level of work in the private sector.