Retail Sales -- Thank God for Inflation

From Thompson Financial:

The Commerce Department reported Monday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February. The March gain primarily reflected higher costs for gasoline, which climbed to record highs. Excluding a big 1.1 percent rise in sales at gasoline service stations, retail sales would have been flat last month.

So -- without this:



There would be no gain. That's really comforting.

This really isn't that complicated.



Declining employment



Leads to lower income



Leads to declining sentiment



And declining confidence



Leads to lower outlays

More importantly, look at this chart of real (inflation adjusted) retail sales from the St. Louis Federal Reserve



Sales have been flat for about two years.



And the year over year chart is not negative -- which is definitely not good.