Dead as a Doornail!

The Service Industry indicator came out and signalled a "surprise" contraction.

Worse yet, same store sales for November dropped 0.3%. While the journalist does remind us that this is a comparison with last year's financial meltdown panic numbers, he forgets something very important. The same store sales numbers DON'T INCLUDE THE THOUSANDS OF STORES THAT WERE CLOSED IN THE LAST 12 MONTHS! How about 600-700 Circuit City stores for starters? How about that 20% shopping mall vacancy rate? On the other side, Apple is not a retailer, according to same store sales, even though the Apple store is probably the most popular place in the mall, as well as the point of sale of most Apple products.

In this economy, same store sales is a terrible proxy for the health of the consumer. Sales tax comparisons are much better, and most states have been showing declines in the teen or twenties for months now.

Target, for example, was down 10.4% last November, and another 1.5% this year. All this means one thing: deflation. Abercrombie and Fitch dropped 17%, which would have taken the cake, except for Saks which raced away with a 26% drop.

The consumer is dead as a doornail.