"Consumers Tighten Belts," opined the The Wall Street Journal on Friday: "The Commerce Department reported … that sales at retail establishments … fell 1.2% in May from April. The decline, driven by sharp drops in autos and building materials, was the first since September 2009, when sales fell 2.2%."
So -- horrible news, right? Sales fell in May. Even worse, according to the Journal, they fell partly because of "sharp drops in autos" purchased in May. But … hold up a sec. Weren't we hearing just a couple of weeks ago that automobile sales were up in May? Didn't Ford
The answer's actually quite simple: We're talking about two different time frames -- comparisons of May 2010 sales against sales:
So while it's true that sequentially, automobile sales declined in May, if you look at things from a year-over-year perspective, automobile sales arguably grew most of all.
Not out of the woods yet
My point being: When gauging the health of our economic forest, be aware of which particular trees you're examining. Numbers chosen in isolation can lie to you, and statistics can deceive. And speaking of deception, don't be surprised if, a few weeks from now, you're presented with new data seeming to show a rapid bounceback from the gloomy news of last week.
As I've mentioned previously, the same folks who prepared the above charts -- the U.S. Census Bureau -- are currently in the midst of a 600,000-worker hiring effort. As we speak, all these new temporary workers are beginning to cash paychecks, and I wouldn't be a bit surprised to learn next month that said workers spent those paychecks. This could cause a spike in retail sales when the next report comes out in July. But Census jobs being temporary, I'd also expect this spike to be short-lived, with sales reverting to their longer-term trend shortly thereafter.
Where's that trend headed? Remember the warnings from American Eagle
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Wal-Mart is a Motley Fool Inside Value pick, and Ford is a Motley Fool Stock Advisor selection, but Fool contributor Rich Smith owns no shares of any company named above.The Fool has a disclosure policy.