Liberal policies fail again, May retail sales slump
Oh the numbers are bad, unexpectedly (always with the unexpectedly) bad.
Sales at retailers unexpectedly fell in May, raising some questions about how much consumers will be able to continue contributing to an economic recovery.
According to a Census Bureau report released on Friday, retail sales dropped in May for the first time since last fall, driven mostly by a sharp plunge in purchases of building materials.
“What’s going to happen is a reassessment of the underlying momentum of the economy,” said Ian Shepherdson, chief United States economist at High Frequency Economics. “If the monthly numbers don’t improve in coming months we can probably expect the third-quarter growth number to look very shaky.”
And the reason for the slump? You guessed it, the Cash-for-Appliances welfare checks ended.
Economists have attributed the decline to a possible winding down of incentives to purchase energy-efficient appliances, like tax rebates. Sales by building material suppliers had surged more than 8 percent in each of the previous two months.
“Basically when the incentive was there, people bought,” said Nigel Gault, chief United States economist at IHS Global Insight. “When the incentive dries up because funds run out, people pull back again. And frankly the correction in building materials probably has further to go.” . . .
The winding down of incentives to purchase energy-efficient appliances may also partially explain the decline in sales at department stores, which sell goods like air-conditioners and kitchen appliances. Department stores saw purchases fall 1.8 percent in May after falling by the same percent in April.
Big shocker. As we noted just a week ago, when the $8,000 home-buyer giveaway ended, home sales cratered, when Cash-for-Clunkers welfare ended, car sales dropped, and when the temporary Census jobs go away, employment numbers will drop.
Not to beat a dead-horse here, but how many times do we need to explain that the way to spur sustained sales of a product, whether it’s a car, TV, Cuisinart, house, or even a job, is for there to be a genuine demand. Genuine consumer demand arises when people can earn disposable income. Genuine corporate demand for employees arises when companies have money from sustained sales of their products.
Welfare payments to people so they can buy specific products doesn’t change anybody’s underlying economic condition.
If the government wants to assist, it should cut individual and corporate tax rates. And then get the hell out of the way.
The Liberals’ policies are untethered from any viable economic model. Just look at their numbers.