Bad Weather to Blame for Consumer Spending Pullback? Numbers Argue Otherwise

Mainstream stock advisors are blowing air…telling us the U.S. economy is stalling due to cold weather. They say the economic chill caused by the uncharacteristically cold weather this year is only temporary. I don’t believe this for a moment.

Sure, the weather had its impact. Consumers have been reluctant to go out and shop, and higher home heating bills might have them spending otherwise so far in 2014, but there’s more to the story.

While discussing existing-home sales for January, the chief economist at the National Association of Realtors said, “Disruptive and prolonged winter weather patterns across the country are impacting a wide range of economic activity, and housing is no exception.” Existing-home sales in the U.S. economy declined by 5.1% in January from the previous month. (Source: “Existing-Home Sales Drop in January While Prices Continue to Grow,” National Association of Realtors, February 21, 2014.)

The reality of the situation is that existing-home sales in the U.S. economy have actually been declining since August of last year. The annual rate of already built homes being sold in the U.S. economy was 5.33 million in August. In January, it was 4.62 million. (Source: Federal Reserve Bank of St. Louis web site, last accessed February 24, 2014.)

Below, I’ve prepared a table that shows the extent of the drop in existing-home sales in the U.S. economy.

 

Source: Federal Reserve Bank of St. Louis web site,
 last accessed February 24, 2014.

 

But weak home sales aren’t the big-ticket item being blamed on weather. We are told auto sales are slowing down due to cold weather as well. But my numbers show the annual rate of change in auto sales in the U.S. economy has been declining since November of 2013.

U.S. auto sales declined 6.1% in December and then by another one percent in January. (Source: Motor Intelligence, February 24, 2014.)

Retail sales in the U.S. economy are in a very similar situation. Look at the table below.

 

Source: Federal Reserve Bank of St. Louis web site,
 last accessed February 24, 2014.

 

Since September, retail sales in the U.S. economy have declined roughly 0.3%. This is after a small increase in October and in November.

Blaming the weather can only go so far. When you look at the economic data, the trend isn’t in favor of those who say the U.S. economy will continue to improve. I see an outright economic slowdown.

In times of peak optimism, it’s very common to see stock advisors react the way they are reacting now—forgetting the trend and having unrealistic expectations. I am skeptical on any talk about economic growth in the U.S. economy and how stocks will show the same performance in 2014 as they did in 2013. I just don’t see it happening.

This article Bad Weather to Blame for Consumer Spending Pullback? Numbers Argue Otherwise was originally published at Profit Confidential