We had two pieces of economic news this morning. The Producer Price Index and Retail Sales. While the official expectations were for PPI to be flat, most people I talked to ahead of time expected it to fall. And fall it did, down 1.2% in March. We are now at the deepest rate of PPI deflation since January 1950.
But that’s not the big disappointment. The big disappointment is in retail sales, which swooned 1.1% in March. Compare that to an expectation of a 0.3% gain (on the heels of a better-than-expected 0.3% gain in February). Stripping out both auto sales and gasoline — why? Because that’s what economists do — you get a drop of 0.8%, the biggest decline since December.
This bad retail sales number is deflating hopes for a consumer rebound. It is also sending stock market futures deep into the red. We’ll see how the day plays out, but it looks grim now.
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