Retail Sales See January Increase

The U.S. Department of Commerce reported on Tuesday that retail sales were up by 0.4 percent month-over-month in January, which is more than in recent months, but not as much as economists had expected.

The U.S. Department of Commerce reported on Tuesday that retail sales were up by 0.4 percent month-over-month in January, which is more than in recent months—December’s increase was only 0.1 percent—but not as much as economists had expected. Most of the difference between the expectation and the end result stemmed from the fact that car sales weren’t quite as brisk in January as previously, even considering seasonal adjustments (and provided those adjustments are correct; retail sales sometimes get revised quite a bit after the first report).

Take out auto sales and retail sales were up a more robust 0.7 percent, which is the highest non-auto retail sales uptick since early 2011. The likes of Walmart and Target, which count as general merchandise purveyors, saw sales increase 2 percent, while department stores—which suffered greatly during the recession—bagged a 1 percent increase in sales in January. Grocery stores, sporting goods stores and even bookstores did better than in December. So did gas stations—but that was because consumers were paying more last month for gas, not because they were getting more.

With employment up and retail sales up, businesses seem to be adding to their inventories at a greater pace as well. A separate report on Tuesday by the Census Bureau noted that business inventories rose 0.4 percent in December, which is a decent increase, though not quite as much as in November.

Volcker rule inspires mountains of comments

Monday was the deadline for public comments on the Volcker Rule, a part of Dodd-Frank that prohibits banks from trading with their own money, and an estimated 200 letters were filed with the Securities and Exchange Commission seeking to influence the final shape of the regulations based on the rule. The prospect of not being able to play with their own money—which Volcker rule advocates say establishes a conflict of interest for the banks—has clearly hit a nerve among the big-money banks and those industries that feed on their business. Many of the letters were from them.

Goldman Sachs, Morgan Stanley and Citigroup each submitted letters (typically 10 to 20 pages of argument), but so did Wall Street trade groups (such as the Securities Industry and Financial Markets Association), law firms and others, all seeking to eviscerate the rule. Consumer advocates, lawmakers and none other than former Fed chairman Paul A. Volcker also sent letters, urging strong regulations based on the rule.

Also on Tuesday, as the sun was setting on Capitol Hill, it looked like a deal would be made between the House and the Senate to extend not only the payroll tax cut, but also unemployment insurance payments and higher rates of Medicare reimbursement for doctors. Did it reflect a spirit of bipartisanship and putting the nation’s interest ahead of party considerations? Or the fact that Congress didn’t want to miss its long Presidents Day weekend?

Pulse of Commerce Index runs contrary to other indicators

The UCLA Anderson School of Management and Ceridian Corp. said on Tuesday that their Pulse of Commerce Index, which tracks diesel fuel consumption data for over-the-road trucking as an indicator of the direction of the U.S. economy, dropped 1.7 percent in January, following a 0.4 percent decrease in December. January’s reading puts the index 2.2 percent below year-ago levels, meaning that there’s been essentially no growth in the index since the summer of 2010.

The organizations acknowledged that it’s an odd result, considering the forward momentum of the economy. “It seems difficult to square the behavior of the [index] with the evident improvement in a number of economic indicators, most notably the increase in payroll jobs and the decrease in initial claims for unemployment,” Ed Leamer, chief economist for the Ceridian-UCLA Pulse of Commerce Index and director of the UCLA Anderson Forecast, said in a statement.

Wall Street was down until the last minute on Tuesday, but the markets ended essentially flat. The Dow Jones Industrial Average eked out a gain of 4.24 points, or a vanishingly small 0.03 percent, while the Nasdaq was up even less, 0.02 percent. The S&P 500 ended for a loss, but not a very large one, down only 0.09 percent.