Worst Government Report on Retail Spending.... Ever

Normally I ignore the government reports and listen to the companies. But you know it's bad when even the government reports are showing historical readings. Even worse than post 9/11. Imagine this, with $2.50 gas and all at the time ... I thought that was all that was ill with the consumer (source: Kudlow) Keep in mind part of this drop was deflation from dropping gas prices... so it's not a clean number - nothing from government is ;)

• Consumers, taking a beating from the worst financial crisis in seven decades, cut back sharply on their spending in October, pushing retail sales down by a record amount. The Commerce Department reported Friday that retail sales fell by 2.8 percent last month, the biggest drop on record, surpassing the old mark of a 2.65 percent plunge in November 2001 that occurred after the terrorist attacks. The figures were worse than expected, with economists surveyed looking for the headline sales number to fall 2.3% and sales excluding autos to drop 1.7%.
• The October sales decline was led by a huge fall in auto purchases, but sales of all types of products suffered as consumers, worried about their jobs and the market turbulence, cut back sharply on spending. Sales at furniture stores dropped 2.8%, sales at electronics and appliance stores fell 2.3%, and sales at hardware stores fell 0.4%.
• Sales at the mall were horrible. Department store sales dropped 1.3%, clothing store sales fell 1.4%, and sporting and hobby stores sales fell 1.6%
• It marked the fourth straight decrease, the longest stretch of weakness on record.
• A survey of the nation's big chain retail stores found that retailers suffered through the weakest October in at least 39 years even though they tried to gin up more sales by a frenzied round of price cutting.
• "You might have hoped, say gasoline was way, way down in price, that might free up money to spend on other stuff. But that didn't happen, people still spent less on other stuff. So that's not good," said Nigel Gault, chief U.S. economist at Global Insight in Lexington, Massachusetts. (This guy has no chance showing up on Kudlow's show after that quote)
• Lakshman Achuthan, managing director at the Economic Cycle Research Institute, a New York-based independent forecasting group, put it more bluntly: "Not only is no economic recovery on the horizon, but the economy is falling off a cliff at its fastest pace in at least six decades.

And on the potential deflation front

• Labor Department figures showed import prices dropped 4.7 percent, pointing to a rising danger of deflation ``Deflation is a word that will be increasingly used over the coming months.''
• Ellen Zentner, a senior U.S. macroeconomist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said in a Bloomberg Television interview. ``We're expecting the worst recession, possibly, post-World War II.''

Oh lookee here, the timing is perfect considering my previous post... and so it begins - the federal bailout of the states and municipalities- let the handouts begin.

• Elsewhere Friday, three mayors pressed the federal government to use a portion of the $700 billion financial bailout plan to help large U.S. cities with pension costs, infrastructure investment and cash-flow problems stemming from the global financial crisis.