Why Isn't Anyone Buying?
03/09/2015 12:01 am EST
Auto and retail sales were weak in February and MoneyShow's Jim Jubak explains what he's looking for in future data to determine if it can be blamed solely on the weather.
We hope it's the weather. What we've seen in February is unexpectedly weak retail sales, unexpectedly weak car sales, that basically everybody from Ford to GM to Toyota missed their targets for February sales. What we're seeing is that—while incomes look like they actually went up relatively strongly in February—that we're not seeing that money go into purchases. Retail sales are pretty, “Meh,” so we're seeing the savings rate go up.
The question is whether this is a reflection of some kind of long-term view on the economy, that people are saying, “Well, we don't think the economy is really as strong as everybody thinks it is, we have a lot of worries. If we look out, we want to save money because we don't really trust the future very much, or that it is because January and February have been really, really cold and very, very snowy in big parts of the country. People don't go out and try to buy cars and drive around to showrooms in those kinds of conditions. They don't go out to buy extra stuff at the stores, so maybe it's the weather.
If you're looking for the potential silver lining, you want to say it was the extreme cold; it was the polar vortex, the artic vortex driving snowstorms in Boston and in Chicago. All of this added up to weak shopping for whatever it was; cars or stuff at Costco. If, however, this wasn't simply the weather, and when we get to better weather in March, April, and May, we see still weak sales, you've got to start to take this seriously and go, maybe people aren't as really, really comfortable with the strength of the economy as Wall Street and economists say they should be and then I think we would need to reconsider a stock market at all time highs.