Why this Economy Feels Even Crummier than the Data

$271 billion in total business sales officially disappear: Census

Total business sales in the US did in April what they’ve been doing since July 2014: they dropped: -2.9% from a year ago, to $1.28 trillion (not adjusted for seasonal differences and price changes), the Censuses Bureau reported on Tuesday. That’s where sales had been in April 2013!

This is a barometer of just how tough business has become in the US. These sales are not just corporate sales, but total sales, including those by small operations and sole proprietorships. The data is survey based, and covers only sales in the US, unlike sales reported by S&P 500 companies, which include sales by their ventures overseas.

These total business sales are composed of three categories: sales by merchant wholesalers (34% of total), manufacturers (35% of total), and retailers (31% of total).

And they were crummy in April: Sales by manufacturers dropped 4.7% year-over-year to $453.7 billion, not seasonally adjusted; sales by retailers rose 2.1% to $394.3 billion; and sales by merchant wholesalers dropped 5.3% to $430.6 billion.

Among wholesalers, sales in the biggest durable-goods categories all dropped year-over-year: automotive -4.1%, professional equipment -0.7% (including computer equipment -6.6%), electrical equipment -7.4%, and machinery -2.2%.

Non-durables did just as badly, except for drugs, which rose 2.9%. They’re the largest of all wholesale categories at $52.7 billion! They accounted for 12.2% of total wholesales! This is where the US economy is headed. Drug sales increase no matter what, based on rampant price increases by state-protected monopolistic structures that continue to gain heft via incessant mergers and acquisitions.

By contrast, wholesales of farm products, a smallish category at $16.0 billion – presumably still excluding the booming production of marijuana – plunged 19.2% from a year ago, largely due to crushed prices of agricultural commodities. This is what big pharma needs … competition! But no way.

Wholesales of groceries, the second-largest category, fell 4.3% to $49.3 billion. Wholesales of petroleum products plunged 18.9% based on the oil price plunge. So it was another ugly month.

But here’s where it gets sticky.

Economic data like this is collected via surveys with relatively small sample sizes. The results are run through an economic sausage maker to produce presentable data reflecting the vast and complex US economy. But the outcome can be a little, let’s say, inaccurate.

So Tuesday’s report included this gem:

Revised historical data from the Manufacturers’ Shipments, Inventories, and Orders (M3) Survey were released on May 18, 2016, and are reflected in this report.

Turns out, the Census Bureau had revised total business sales going back to Adam and Eve. Normally, we would just compare a month or two of the revisions to the old data to get a feel for the direction.

But on March 15, we’d lamented that total business sales for the period through January, based on data the Census Bureau had released at the time, had once again fallen sharply. We still have that data set. So we did something nasty just now: we overlaid the two data sets in one chart.

It forms a strangely consistent pattern: the March 15 data, as bad as it seemed at the time, was actually a lot worse. The old data set had overstated total business sales every month by billions of dollars going back to February 2014 (the revisions for prior years were minor). In that light, today’s revised data looks a lot worse.

The sales peak in July 2014 was revised down by $14 billion, or more than 1%, to $1.351 trillion. In an economy that can’t grow 2% annually, 1 percentage point in total sales makes a big difference.

Sales in January 2016 were originally reported as $1.296 trillion, the amount we lamented because it was terribly low. They’d fallen 1.1% from a year earlier and 5% from their peak in July 2014. “They’re now back where they’d been in January 2013,” we wrote at the time.

Turns out after the revisions, January sales had been the lowest since October 2012! And they’d first reached that level in April 2012. That was four years ago! February was even worse!

The chart shows the old data (red line) and the revised data (black line), seasonally adjusted. Note how the original data was consistently higher:


In sum total, the revision going back to January 2014 slashed the original data by $271 billion. That’s a lot of sales for a 28-month period that suddenly didn’t happen.

In April, total business sales edged up 0.9% from March to $1.29 trillion seasonally adjusted. That sort of March-April uptick happened every time but once since the Financial Crisis. But sales were down 2.6% year-over-year, down 4.6% from the July 2014 peak, and back where they’d first been in January 2013.

And we already know: future revisions will knock them down further.

The crummy story doesn’t end here.

It gets worse: These sales are not adjusted for price changes. But over the four-year period, the Consumer Price Index increased 4.2%. So in real terms, chop off another piece of that miserable sales pie.

Since April 2012, the US population has grown by 3.1%. So figure in the additional people plus 4.2% inflation over the period, to get real per-capita business sales. From that perspective, they’re a true fiasco.

That’s why the economy feels so terrible for tens of millions of Americans who’ve not been able to scramble on the Fed’s wealth-effect gravy train — the real per capita who experience the economy as it really is.

So what’s “one of the biggest threats to our economic outlook?” Read…  These Debt Slaves are the Government’s Largest Asset Class, and it will Haunt the Economy for Years

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  55 comments for “Why this Economy Feels Even Crummier than the Data

  1. professor plumb says:

    How much of this decline is directly and indirectly attributable to oil prices tanking as low as $30. How much is attributable to the strengthening of the dollar and associated decline in commodity prices? Deflation in goods and inflation in services especially in health and education!

  2. PAUL D Schwartzmeyer says:

    In case nobody noticed, food prices have collapsed. Here in Cambridge, it seems like theyre giving food away. Eggs are 79 cents a dozen. Boneless, skinless chicken thighs are $2.29 a pound.

    • Wolf Richter says:

      Egg prices had skyrocketed a while ago (avian flu?), more than doubling. Now they’re back where they’d been a couple of years ago. And that’s good. We switched from jumbo 2 steps down to large (the smallest size available) to fight inflation our own way (bring demand down) and still paid more than before. Now we’re back at jumbo.

      These price spikes happen with animals that are susceptible to mass diseases. Happened with pork and beef too. People switch to something else. Demand collapses, and after a while, prices follow.

      • polecat says:

        that’s all fine and good, while one has the ability to switch to something else…….. what happens when the ‘switch to’ is ‘switched off’ due to uncontrollable disease, or major disruption from economic crash and /or war……systems are much more entangled and fragile then people realize!!

        • Thomas Malthus says:

          Skip to page 55 :

          This study by David Korowicz explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure.

          He uses a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.


      • nick kelly says:

        Beef here in Canada is way up- blade steak 14 a kilo (a kilo is 2.2 lbs)
        Sirloin 20- strip loin 30
        Lean ground beef is about 12 a kilo.
        I feel sorry for a poor family because the hamburger recipes are no longer cheap.
        Remember the adage: the cure for high prices is high prices. It didn’t work this time. The Alberta herd, which is the mainstay in West Canada actually shrank in the face of record prices. The reason- drought. Much of southern Alberta is semi-arid and the last few years the ‘semi’ kind of backed off.
        A good deal remains the whole loin of pork. Boneless around 6 a kilo.
        Funny thing- the whole thing is about 25 $, but right next to it are pork roasts, which take ten seconds to cut off the loin but can be 10 a kilo. It’s like slicing bread.
        Why anyone would not use a knife to save 40%?

        • Thomas Malthus says:

          Nick…. it is indeed troubling that the adage no longer holds true.

          I suspect a few things are at play …. first off people are just flat broke and up to their eyeballs in debt. No matter what the price of energy — it’s not moving the dial…

          You would have thought $30 would have kick-started growth … but nope — the old nag is dead… $10 oil would not get him to flinch….

          Growth is dead.

          One other key factor is the production costs of oil — they are through the roof — therefore the price of oil cannot remain at $30…. it must be manipulated upwards to prevent the industry from capsizing…

          If anyone doubts that the Fed is manipulating the price of oil — I assume you also think the Fed is not manipulating the stock, bond. property and gold markets too?

          The problem is – obviously – that the higher the price on a barrel of oil — the more the beaten down, broke and out of work consumer suffers… the less he consumes…

          And that is exactly what this excellent article is detailing.

          We are in one of hell of a maelstrom — high oil prices wipe out the consumer — low oil prices wipe out the oil industry…

          Anyone feeling a little anxious about what comes next?

        • Yet another example of what occurs when the vampires suck too much blood and kill their victim. When the host dies, so does the parasite.

        • Thomas Malthus says:

          George – I used to interpret things as you do – I railed at the corruption …

          Yes there is corruption — but think about it — if you were worth 10 billion dollars — would you be on board with these policies that are enriching you — yet are guaranteed to blow the system up that keeps you in champagne and caviar?

          Would you risk it all – for another billion?

          Of course not — that would be madness. And you and your fellow gods would push back big time — and you would have the power to push back.

          You certainly would not be saying Yellen — please Janet do more insane things – I love it — I am making money!

          Which begs the question — WHAT DO THEY FEAR that is making them do these things.

          That is the question I asked when I finally realized that Bernanke was clearly not stupid — and the elites clearly understand the implications of these policies.

          That was around 2010 or so – after I had wasted my time ranting about Bernanke and the banks…

          What do they fear so much that they are willfully destroying the system that allowed them to become rich and powerful?

    • VegasBob says:

      I bought 1-1/2 dozen extra large eggs for 97 cents at the South Tucson Costco…

      I’ll bet Wolf pays a lot more in SF…

    • nick kelly says:

      Well you lucky US folks- here large eggs are about 3.29 C on sale 2.79
      Boneless skinless thighs would be about 15 a kilo, so about 6 a lb C
      So even corrected for C$ = .80 US we’re paying double.
      Mostly thanks to marketing boards aka supply management aka price fixing.
      But my self- defense expenses are minimal.

      • nick kelly says:

        Wow- just read Petunia’s post- ya my medical is 100 % covered except for drugs, which I never need.
        Well I said ‘need’. It is possible to supercharge a perfectly adequate car
        Not covered

    • Juju says:

      Chicken, Whole or Split breasts rib attached are .99c a lb. on the West Coast and have been for… 10 years. 2.29/lb for thighs? Ouch.

  3. Tom Welsh says:

    “Why this Economy Feels Even Crummier than the Data”

    Perhaps because the data is a bunch of barefaced lies?

    • Mick says:

      Exactly Tom. Government stats are pure propaganda put out by a criminal syndicate to control the population.
      It’s really that bad.

  4. Buddy says:

    Good morning Wolf
    Looks like sales in Jan 08 were about 100B less than Jan 16. I am not sure that would cover CPI for that period. Add in the growth in population and you have a larger number of people splitting the same pie. Running in place. However, the little numbers game by the Ministry of Truth, sorry I meant the Census Bureau is magnificent – ‘ Stagnation is Growth’

  5. GSX says:

    Sorry FED but there is not sustainable growth for any meaningful inflation, oil issues or not. This analysis does not require a London School MBA. FED is dead. Raising rates??? Thats for other people.

  6. I saved a lifetime so that I could retire comfortably. I should be making 50.000 a year in interest but with zero % I get enough interest to wash my car once a month. Since I make nothing I spend nothing. After what the banks, Wallstreet and our politicians did to us in 2008 it seems the people who did things right are the only ones being penalized. They still make more in a year then I did in a lifetime. They still get their pay raise but my ss check did no go up. I did buy a pitch fork the other day.

    • Petunia says:

      You better pray you don’t get sick or injured. Your nest egg will disappear before your eyes. My dead in laws are being foreclosed on by Medicare. Their condo was worth maybe $50K. The bank wants the outstanding mortgage $30K and Medicare wants another $60K. This is what they get for working hard and doing all the right things.

      • VegasBob says:

        Don’t you mean Medicaid, Petunia?

        • Petunia says:


        • VegasBob says:

          Interesting. I’ve known for years that Medicaid can “claw back” money from people’s assets for benefits paid after age 55, such as nursing home payments.

          But I’ve never before heard of Medicare going after anybody.

  7. Petunia says:

    I wish I could see some of that deflation you guys keep talking about, but it is just not there. I was waiting for the Memorial Day sales to do a little shopping and the sales never materialized. Spent the money on some nice steaks instead.

    I consider myself an amateur retail analyst, out of necessity mostly. Here are my observations, prices are higher in the last quarter. The discounting when it happens is not that deep, less than 10%. Traffic in the mall and big box stores is minimal. The high end stores are discounting but not enough to attract the aspirational buyer, me. In the last month, I have been in every furniture store in town, most were empty or close to it. The prices on furniture, even for the crappy furniture, are very high. The thrift stores are busy.

    The only exception is the restaurants. The popular ones are packed all the time, from the breakfast places to the hot dinner spots. The less popular ones are dead too.

    • chris Hauser says:

      there may not be much discounting, but there ain’t that much sales.

    • Thomas Malthus says:

      I feel for you. But unfortunately this is as good as it is going to get.

      Let me explain:

      What we know as the global economy is a product of the spread between how much energy we use to extract a barrel of oil.

      Up until fairly recently one barrel in got us 100 out. So we had 99 free barrels of surplus that was used to grow the economy.

      Think of all the things those 99 barrels of free energy could do for us – they ran our factories – moved our vehicles – flew our airplanes…

      But unfortunately the virtually free oil is in decline. But total oil production is of course not declining – we are scraping old wells in the US for shale oil — in Canada we are mining tar sands — in many places we are drilling deep under the oceans for oil.

      Plenty of oil that’s for sure.

      BUT. The amount of free oil has dropped off dramatically. Yes we still some old legacy wells that generate a good return however all these new techniques require a lot of energy to extract oil – I have seen that some ratios are as low as 1:5.

      I understand the average is around 1:12.

      So instead of 99 free barrels we get 12.

      We are dangerously close to the point where we don’t have enough free barrels to operate the global economy – to allow governments to continue to operate.

      We are definitely to the point where there is not enough free energy to maintain growth. As we can see things are stagnating.

      And remember – day after day — minute after minute –year after year — the wells that delivered high returns are depleting…. so the critical ratio worsens …..

      Like I said – this is as good as it gets. It is all downhill from here.

      I wish I could deliver better news but unfortunately this is one of those problems without a solution.

      We need a new cheap source of oil – or some other energy source that is very cheap to produce and that can do all the things that oil does.

      There are no new sources of cheap to produce oil — if there were would be be scraping the bottoms of old wells?

      And there is nothing on the horizon that will substitute for oil — nothing cheaper and nothing that can do all the things that oil can.

      Time is short. Make the best of what remains.

  8. michael says:

    I agree that there is inflation in many areas such as housing, food and healthcare. The government inflation statistics are a joke.

  9. OutLookingIn says:

    Crummy Economy?

    Worse than that.

    The US industrial production numbers are out this morning and they are dismal.
    For the 9th month in a row the production rate is down. This is now the longest run of negative production numbers, without a nation wide economic recession in US history.

    • frederick says:

      And why would we expect anything else with US manufactering headed offshore and the strong dollar making us less competitive in world markets i just cant see this trend changing unless they revalue the dollar say 30 to 40% lower which by the looks of things may have been the plan all along Got gold?

  10. EVENT HORIZON says:

    Halp me here:

    An “APRIL” of this year, to me, is the same time and season as an “APRIL” of any year in the past.

    This being so, why do they need this “seasonal adjustment”? The season did not change since…..it is the same “Month”.

    • Wolf Richter says:

      Yes, good question. And they have both, seasonally adjusted and not seasonally adjusted. I referred to both, indicating it that way.

      The problem with a chart is that not-seasonally adjusted data that is very seasonal creates a very noisy chart with lots of ups and downs, and it can be hard to see the trend. Hence the seasonally adjusted data for the chart.

  11. ERG says:

    Anyone remember ‘shovel-ready jobs’ and ‘recovery Summer’? We took a ride in the Obama limo for 8 years and now we are about to be dumped at the curb in just about the same place where he picked us up in 2008, only poorer, unemployed, and a lot less safe.

    • polecat says:

      ..and it’s not dirt you’re being dumped into…..

      “Phew!…….this stuff really smells!!!”

    • Esq Winter Park says:

      Much of that ride with the Congressional appropriators being Republican. Sorry but they hold the bank keys. The PRez is more of a figure-head than ever. Thanks to Republicans for not funding what needs to be done for taxes, infrastructure etc. They are the culprits. You voted for them? Its on you.

      • bead says:

        The Republicans were so afraid of Obama succeeding that they undermined him anyway they could. So they get Trump and it serves them right. Just deserts.

  12. OutLookingIn says:

    Hap… Hap… Happy Talk.

    June 07, 2016 Fed Chair Yellen.

    Saying the things you want to hear:

    “I am delighted to be with you today, the economy has registered considerable progress over the past several years toward maximum employment and price stability, and there are good reasons to expect that we will advance further toward those goals”.

    • polecat says:

      Wah..wah…wah..wah..Wah. Wah..wah..’RATES’..wha..wah..Wah…………wah.

  13. Meme Imfurst says:

    Lets look at what we all know:
    Bad retail and manufacturing.
    Exports are a disaster.
    Baltic dry is a disaster.
    Drowning in oil but the price climbs.
    A stock market held up by the FED.
    Upper middle class in now the upper lower class.
    Healthcare is crippling the pocket book.
    Rising energy is stripping wage surplus.
    Food NET contents is down, not the price.
    The elderly are still working to make ends meet.
    Most of the so-called jobs created are bartenders and waiting tables.
    Net jobs created in the last 8 years is negative.
    Bonds tell us there is no growth for years to come.
    and 10,000 other data points as plain as day to see.

    Now, someone tell me that the FED, all the central bankers, Wall Street, all the stock traded corporations , the President and all the cabinet members, the Congress, Educational universities, Think tanks, economic ‘advisors’ , the rating agencies, the bond market, the investment funds, state and municipal governments, The Pentagon, and 10,000 other organizations don’t know what is going on?

    Comes the question, how can they not know?
    Comes the question, they are content that status quo works for them?
    Comes the question, they want it to continue unabated?

    The stage show can not go on…as Pink Floyd put it, less they build tiny houses under the freeways of America.

    PS: I can’t go to Zerohedge anymore. The vile hate comments are out of control and may well do Tyler in….my opinion.

    • OutLookingIn says:

      MeMe –

      Stopped reading the ZH comment sections years ago. Nothing but sophomoric, inane, ignorant, off subject gum flapping.

      However, the ZH articles are still worth reading through. Just don’t go to the comment sections, if you are expecting any intelligence above a primary school grade. There is none!

      • Bryce Nelson says:

        Yep, there is no point in reading the comments section. Years ago there were some gems in the comments section; now there is just drivel.

        One thing I will say is I didn’t miss a lot of the problems and stresses in the financial world because of Zerohedge. They still do a great job of keeping up with this bizarro world we find ourselves in. However, I try to balance that with bullish information too (even though there is very little of it) just so I wouldn’t become too negative. It helps to try and maintain a balance as much as possible if you want to keep your sanity.

      • frederick says:

        Totally disagree granted there is alot of bickering in the ZH commenters but lots of truth as well if you can cherry pick alittle but if you want to deny the truth maybe just listen to CNN or Michael(Wiener) Savage

        • Thomas Malthus says:

          I agree with outlook — the comments on ZH are a pile of rubbish

          For every thoughtful one you have to troll through a 100 racist, ignorant, inflammatory, profanity-laced dogshit.

          The comments section used to be better but it has fallen off and the good contributors have left

          Yes there continue to be some good articles on ZH but I doubt I read more than 1 in 10.

          A lot of ZH articles are rush jobs filled with hyperbole — they should know that if the boy cries wolf to often nobody listens….

          Wolfstreet may have less quantity — but the quality is far higher — I read 8 of 10 here.

          The other go to site is Finite World – energy focused but it is the only site that connects the dots between the financial crisis and what is causing it. Gail Tverberg is brilliant. I also like Tim Morgans surplus economics… not many articles but they are all well thought through. Mish Shedlock is pretty good as well

  14. As my Father frequently told me “never attribute to malice that which is adequately explained by stupidity.”

    The problem does not appear to be some sort of criminal conspiracy but rather a malignant example of “telling the boss what he wants to hear.” The toxic effect is not the “pencil whipped” data per se, but the rather the gullibility of the senior managers and administrators who [should] know better, but who start believing these fantasies, and making policies accordingly.

    • polecat says:

      You look at every one those institutions that Meme Imfurst lists………they ALL have malice and malfeasance as part of their modus operandi!……it’s definitely NOT just stupidity……..

      “Remember the Muppets!”

    • gunther says:

      That happened in the eastern bloc led by the Soviet Union aka Russia as well. After some time the system blew.

  15. Mark Vickers says:

    But (alluding to your first sentence), weren’t the adjusted total business sales the highest they’ve been since last November? It’s true, of course, that the historic highs were in the middle of 2014 and that the current numbers are below that, but the numbers seem to be rising for now. Maybe that’s all just noise, but I suspect what should worry people more is the rising ratio of inventories to sales, which is higher than it’s been since 2009, according to my reading of the numbers. I enjoyed your data in regard to the revisions.

    • Wolf Richter says:

      Two things: One, as I pointed out, the numbers usually rise in April. And two, the uptick was from a sharply downward revised base. So on an unrevised basis (to get apples and apples), the April number was still below the January number.

      Year over year, which is what really matters to avoid the issues of seasonality, April was down 2.6%!

  16. nick kelly says:

    The Globe and Mail just reported Canadian inter-modal shipping down 9 %
    I can’t remember if that was from 2015 or from last quarter.
    Either way huge.

  17. Thomas Malthus says:

    The subprime mortgage is back: it’s 2008 all over again


    So here we go again — the Fed knows how this ends.

    So why oh why oh why would they allow this again?

    Ask the question people —- what do they FEAR so much that they are willing to blow up the economy (again) ….

    I will tell you what they fear.

    They fear the end of growth the cause of which is skyrocketing oil production costs.

    They cannot just stand by and watch the world go to pieces… so they do ‘whatever it takes’ to try to fend off the monster.

    If it means QE ZIRP NIRP kick the can — just do it!

    If failing companies need to borrow hundreds of billions to buy back shares and stay alive — just to it!

    If it means nearly 30% of the auto market is made up of subprime bums — just do it!

    And if it means you are really desperate and pulling out all the stops — go back to the well — subprime mortgages — just do it!

    Absolutely anything goes here …. this is the end of days here…… please Janet — do ‘whatever it takes’ to delay collapse for as long as possible.

    I am 100% behind you.

  18. josap says:

    My neck of the woods has food & gas down, elec and medical up. It isn’t going to get any easier.

  19. roddy6667 says:

    These sales numbers are for the whole country. Most of the profits go to the top 5% of the population. The rest of the people are sliding downhill. It’s a race to the bottom.

  20. frederick says:

    Well to all you precious metals deniers out there Janet Yellen sure did me a favor yesterday keep it comin Janet

  21. Agnes says:

    I admit I am happy to be wrong that the overnight rate was not raised.

    It is interesting that the comments so far are about necessities (food, medicine,energy).

    Long term the average ROI is 3%. Since more than that is being sucked out by government and financial “managers”, we are in trouble.

    In studying the silver market pricing versus annual production compared to any other commodity –Except Oil– I did believe the pricing was rigged (not gold). Oil was the only commodity to come close. After I convinced myself I stopped following it, except to muse(ten years later) that the drop from 150$ish oil was probably to induce Mexico to sell more oil than was in their own best interest, as they had made social contracts at the higher price. I mention this ancient history because I am marginally excited about the Chinese and Thorium….and Why ? am I excited? Because the PTB have not forced Molycorp and Lynas into bankruptcy as any dirty miner ought to be at the least excuse. They are hanging on by their fingernails. At 5 cents they are not much of a downside risk. Of course it hurts that we gave all the Oak Ridge research to the Chinese….but surely we can reverse engineer their results as well as Microsoft did IBM…just buy a few Virgins. :)

    Basically I agree with TM that cheap energy is awesome and with d that some Chinese regard intellectual property rights as some American Indians did the Earth(it can’t be owned only shared)(I myself think B.Franklin had the right idea…give the fellow a little incentive). After filing 7 patents my Dad reverted to the “secret process” method of operating because the only financially worthwhile patent is one that has a very expensive battery of lawyers attached to it.

    In sum I think the PTB know they need fresh meat, and Thorium may be it.

  22. rjs says:

    actually, the data is probably crummier than the economy…factory sales and wholesale sales are heavily weighted with lower priced commodities (food processors and refineries are “factories”)…by using CPI as a deflator, you’re using a price index that is 40% housing related, and which includes rising prices for medical care and tuition as well…the producer price indexes for goods would be closer, i figure about 70% factory sales and wholesale sales are finished goods…CPI isn’t even appropriate for retail for the same reasons…ie, the CPI for core goods was down 0.2% in May, while core services was up 0.3%…

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