Consumer spending increases and yet it is bad news

Well it seems that every year I've been hearing retailers saying this Christmas shopping season is horrible in December, but in January when the companies report their quarter end results, most had a good quarter and Christmas season after all.

Well, again, this year I've been hearing that retailers are not doing well this year. Well according to the WSJ (subscription required) retail sales excluding automobiles increased 3.6% compared to 2006. Now if you back out gasoline purchases as well because gasoline has increased a lot in 2007, then the year on year increase was only 2.4%. Why are the stores unhappy? Well they were hoping (or maybe dreaming) for a 3.5 to 4.5% increase.

Well lets see what happened in 2007 that might have slowed down consumer spending. Oh yeah, the entire sub-prime mortgage meltdown and the subsequent layoffs across the financial service sector of the economy and the slow down in the housing market. Oh yeah, also the dollar has also fallen against the Yen and Euro this year making toys, games and other goods from those areas more expensive.

So in other words, the US economy has had several shocks and consumer spending still increases from last year at a rate faster then inflation and the retail stores are unhappy that sales didn't grow as fast as they had hoped. Some organizations seemed bound and determined to have a recession in 2008 and will write the news anyway they have to, to try and bring it about.